12th Mar 2015 07:33
LONDON (Alliance News) - Wm Morrison Supermarkets PLC Thursday reported a widened loss for its last financial year, as revenue fell as it lost customers to rivals and it was forced to invest heavily in lowering prices, and it also booked a massive writedown on property.
It raised its dividend for the last year by 5%, meeting a commitment it had given last March, but suggested it will cut the payout sharply in the current financial year as it preserves cash to spend on its turnaround efforts.
The UK's fourth-largest grocer by market share said its targets for the current year will be to lure back customers and improve its offering, and it expects to make "further progress" on cash flow and cut its debt. It said it will provide a more detailed outlook once incoming Chief Executive David Potts has reviewed the components of its new strategy.
"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," Chairman Andrew Higginson said in a statement.
"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," he added.
The company has been slowing the drop in like-for-like sales in recent months, but they still fell excluding fuel and Value Added Tax by 5.9% in the year to February 1, compared with a 2.8% drop a year earlier.
It reported a pretax loss of GBP792 million for the year, wider than the GBP176 million loss it reported a year earlier, as revenue dropped to GBP16.8 billion, from GBP17.7 billion, and it booked a massive GBP1.27 billion property impairment charge.
Morrisons, like peers, stockpiled land and property during the boom years in the UK grocery sector, but has now paired back its expansion plans and is also having to writedown property values due to the downturn in the sector that's seen rivals including Tesco also pare back expansion plans, particularly for big stores. Morrisons, which had been looking to try and catch up with its rivals in the convenience store sector has now significantly slowed its M Local rollout and is reviewing its proposition and site selection criteria.
Morrisons said it will continue to prioritise capital discipline in the current year, and plans further cost savings, improvement in working capital and lower capital expenditure. Its free cash flow before the dividend was GBP785 million in the last financial year, and it generated GBP42 million of cash after the dividend and property disposals.
It made proceeds of GBP448 million from property disposals, and achieved a profit of GBP131 million. Net debt was cut to GBP2.34 billion, down from GBP2.82 billion.
"The 2015/16 dividend will be not less than 5p per share, which the Board believes reflects the commitment to the capital allocation framework, and maintains flexibility around cash flow to enable the investment to build trading momentum," it said.
By Steve McGrath; [email protected]; @stevemcgrath1
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