Morrisons has reported a loss of £792m in its last financial year and announced plans to close 23 of its M local convenience stores.
Total sales in the 12 months to 1 February 2015 were down 4.9% to £16.8bn. Like-for-like sales, excluding fuel and VAT, were down 5.9% but with an improving trend – like-for-likes in Q4 were down 2.6%.
Morrisons said the roll-out of its M local convenience chain had “slowed significantly” and site selection criteria will be reviewed. It is also planning to close 23 M local stores during 2015/16.
Chairman Andrew Higginson, said: “Last year’s trading environment was tough, and we don’t expect any change this year. However, Morrisons is a strong, distinctive business – we own most of our supermarkets, have strong cash flow, and are famous with customers for great quality fresh food at low prices. This gives us a good platform.
“David Potts joins as chief executive next week. Under his leadership, we will focus on building trading momentum and being more like the Morrisons our customers expect. We will invest more into the proposition and put customers at the heart of everything we do. We will listen and respond to our customers, and work hard every day to improve the shopping trip.
“Success measures will be simple – more customers buying more from us. More customers means more volume growth which, ultimately, will lead to better like-for-like, profitability and shareholder returns.”
David Gray, retail analyst at Planet Retail, said: “As anticipated, Morrisons has posted an improving, if somewhat subdued, like-for-like performance, suggesting recent measures like the price comparison loyalty scheme are beginning to bear fruit. Profits as expected remained in freefall, however, as Morrisons has been forced to join the rush towards EDLP.
“Even so, with a new chairman at the helm in the form of retail veteran Andy Higginson, a Tesco veteran and David Potts, former Tesco Asia chief, due to come aboard in a matter of days, the company has no shortage of talent to drive its future direction. Although a true recovery will take years, a steadier hand on the tiller is finally becoming a reality.
“Shelving plans for new M Local convenience stores – for now, at least – while sounding like bad news may ultimately help Morrisons stem the growing profit slide. With outlets yet to deliver a profit and the recent round of closures now largely finalised, clearly something had to give.
“Convenience is a hard battleground, despite the growth of the wider channel. Morrisons’ scattergun approach has proved less than ideal compared to the measured roll-out of rivals like Little Waitrose – which has had much greater success. We can only hope the next wave of diversification in which Morrisons engages will be far more considered.”