11th Sep 2014 06:55
LONDON (Alliance News) - Wm Morrison Supermarkets PLC Thursday posted a further drop in profit in the first half of its financial year, again hit by dwindling UK sales and waning market share, but the grocer raised its interim dividend and confirmed its commitment to paying a dividend of not less than 13.65 pence for the current financial year.
The UK's fourth largest supermarket chain raised its interim dividend by 5.% to 4.03 pence per share, and confirmed its underlying pretax profit guidance for the full financial year of between GBP325 million and GBP375 million.
"We are six months into the three-year plan that we set out in March and, although it is early days, I am encouraged by the progress we have made," said Chief Executive Dalton Philips in a statement.
Morrison posted a pretax profit of GBP239 million for the 26 weeks to August 3, compared with GBP344 million a year earlier.
Revenue in the first half was down 4.9% at GBP8.50 billion from GBP8.94 billion last year, while like-for-like sales declined 7.8%, excluding fuel and VAT.
Market consensus was for the supermarket to post a first-half underlying pretax profit of GBP174 million, and a 6.9% decline in like-for-like sales.
Underlying figures strip out property disposals, multi-channel and convenience development costs.
"As we anticipated, Morrisons first-half 2014/15 like-for-like performance has continued to lag behind our larger competitors. Our investment in price had a deflation impact, weighted towards second quarter. We also continue to face headwinds in the online and convenience channels, although our own businesses are progressing well," the company said in a statement.
Morrisons said that while its like-for-like sales performance is yet to improve, it is seeing some "encouraging initial trends", and it expects initiatives already made to start to benefit its sales performance towards the end of the second half.
"We still have much to do and our new strategy is fully focused on reversing our market under-performance," the company said.
Morrisons said it expects to incur GBP70 million in "one-off costs" relating to Kiddicare trading losses, restructuring, and the launch of its new Morrisons card in the current financial year.
Alongside deep price cuts, the supermarket has been pumping investment into starting its fledgling online business, and the rollout of its M Local convenience store formats.
"On the operational side, we are cutting prices, changing store layout, reducing ranges, extending opening hours and simplified our in-store management structure...and because of this we are on track to launch our Morrisons card by Christmas," Chief Executive Dalton Philips told journalists Thursday.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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