Morrisons outlines empathetic COVID-19 response after difficult 2019 performance, says GlobalData

Following today’s release of Morrisons FY figures for 2019/20, Thomas Brereton, retail analyst at GlobalData, a leading data and analytics company, comments: ‘‘Morrisons (the first UK supermarket to release results in the midst of the coronavirus outbreak) has provided a compassionate set of immediate responses to the crisis, offering: pay guarantee for sick and affected colleagues; more shift flexibility; expansion of online operations by including another 100 stores for fulfilment; and confirmation of immediate payment for small suppliers. It has also provided the first steer on the quantitative impact on the grocery sector of consumers stocking up on household products and durable food products, stating a retail contribution to l-f-l sales of 5.0% for the last six weeks – an expected yet unprecedented uplift compared to the -2.2% retail l-f-l contribution experienced at Morrisons in Q4 (covering November 2019 – January 2020).

“Outside of the recent COVID-19 developments, the results show that Morrisons struggled throughout the second half of 2019, with l-f-l sales consistently underperforming its Big Four rivals from June 2019 onwards (albeit against stronger comparatives in 2018). Consumer data shows that this is less about what Morrisons is doing wrong and more about what its competitors are doing right; Morrisons has found it difficult to vie with the likes of Tesco and Sainsbury’s, both of which used aggressive promotional tactics in a bid to lure price-orientated shoppers back from the discounters. But despite this, Morrisons – through careful cost control and productivity initiatives – has maintained an operating margin year-on-year of 2.9%, seeing underlying operating profit rising 0.6% to £513m for the period.

“Morrisons is better placed than most retailers to get through the turbulent next few months. Its position as a highly cash-generative business has allowed it to implement the compassionate responses outlined above. Looking beyond coronavirus for the remainder of 2020, Morrisons looks in position for a renaissance, bringing in a new senior management team and again expanding wholesale operations (which grew 13.5% in FY2020), particularly with 240 more McColl’s stores set to be transferred to the Morrisons wholesale supply chain and new overseas export partner CP Lotus (China).”