Morrisons reports best quarter in nine years, helped by heatwave and World Cup

UK’s fourth-largest supermarket reveals 6.3% jump in sales and says it has secured authorisation to avoid post-Brexit border delays

(PA (PA)

A summer heatwave and England’s better-than-expected performance in the World Cup helped lift Morrisons to its best quarterly performance in nine years.

The UK’s fourth biggest supermarket chain revealed underlying pre-tax profits for the second quarter were up 9 per cent at £193m, as a turnaround plan under chief executive David Potts gathers momentum.

Like-for-like sales excluding fuel and VAT rose 6.3 per cent in the second quarter, marking a nine-year high, while total revenues for the half-year were up 4.5 per cent at £8.8bn. Morrisons also unveiled a £91m dividend for shareholders.

“Morrisons continues to become broader, stronger and a more popular and accessible brand, and I am confident that our exceptional team of food makers and shopkeepers can keep driving the turnaround at pace,” Mr Potts said.

On Brexit, the company said it has been granted permission for streamlined customs checks, which it hopes will allow it to avoid border delays in the event of a no-trade deal being agreed.

Mr Potts added: “In our case it means that we are considered by the authorities to be a company who has policies and procedures that are thorough and wholly trusted and therefore any hold-ups at customs are, to some extent, simplified.

“I think it also avoids some fairly complex tariff refunds as well, so it’s not a big investment but it just felt like a sensible thing to do.”

The announcement came after John Lewis chairman Sir Charlie Mayfield warned on Thursday that stockpiling food to prepare for the UK crashing out of the EU without a trade deal would be difficult.

“The thing about stockpiling food is the stuff that’s most sensitive to these things is actually perishable, so you can’t really stockpile it, it rots, and you waste it,” he said.

Businesses across a range of sectors have begun building up their supplies of goods in anticipation of long delays at the border unless Theresa May’s team agrees a trade deal before the 29 March deadline.

Nicholas Hyett, equity analyst at Hargreaves Lansdown, said Morrisons had continued to make progress but also has room for further improvement.

“Retail sales are growing steadily, while its wholesale division is turbo-charging the group’s topline,” he said.

“Flat margins could be a touch disappointing, but given the presumably lower margin in the wholesale business, it still suggests an improvement in the performance on the retail side.

“With a high proportion of freehold stores and debt falling, the group’s balance sheet looks robust, and that means cash is available to return to shareholders despite ongoing investment.

“Longer term, the group needs to strengthen its online offering, and convenience has also been a weak spot. However, management are taking steps to improve both areas and initial signs are good.”