Morrisons Q2 update

Morrisons update on Q2 trading for the 13 weeks ended 1 May 2022

Highlights

• Total revenue including fuel up 2.6% to £4.6bn
• Group like-for-like (LFL) sales ex-fuel/excluding VAT of (6.4)%
• Adjusted EBITDA up 14.5% to £71m
• Launched one of Morrisons biggest ever price cut campaigns
• Multi-year supply partnership signed with Gopuff
• CMA investigation into CD&R’s acquisition of Morrisons now concluded
• Appointment of Jo Goff as CFO
• Acquisition of McColl’s in May 2022

*Adjusted EBITDA is defined as operating profit plus depreciation and amortisation, less cash operating leases and business rates relief phasing, plus exceptional items, supply chain disruption and direct Covid costs

Morrisons has today updated investors on Q2 trading for the 13 weeks ending 1 May 2022.  With ongoing inflationary pressure and an increasingly subdued consumer sentiment, the trading environment has been very challenging.  Against this market backdrop, like-for-like sales were down 6.4% but improved towards the end of the quarter, helped by a strong performance over Mother’s Day and Easter.  

In April, Morrisons launched one of its biggest ever price cut campaigns, involving over 500 products and cutting the price of over a quarter of entry level products to help customers with the impact of significantly increased household and living costs.   

Adjusted EBITDA grew £9m to £71m, compared to the same period in the prior year reflecting recovery of profit from areas impacted by Covid and cost savings.

Revenue for the 13 weeks was £4,587m, an increase of £115m, or 2.6%, compared to £4,472m last year. This increase was primarily due to recovery of fuel sales, which increased by 54%, partly offset by a decline in Supermarket LFL in a normalising grocery market environment post Covid. 

On 9 May, Morrisons acquired the entire McColl’s convenience business from the administrators, comprising 1,160 stores - including 270 Morrisons Daily branded stores - together with 16,000 colleagues. As anticipated, the acquisition is currently under investigation by the CMA.  

David Potts, Morrisons CEO, commented: 

“In a very fragile and difficult consumer environment, Morrisons has continued to deliver a resilient performance. This quarter traded over a period of significant Covid restrictions last year when travel and hospitality were both severely limited.  As those two activities returned to more normal patterns this year, we saw very strong growth in fuel sales but a step back in grocery.  

“Retail like-for-like sales in the quarter were also impacted by the discounts we offered last year to NHS staff, teachers, farmers and Blue Light cardholders, as a thank-you for their amazing work on behalf of the nation through Covid. 

“In April we launched one of our biggest ever price cut campaigns which included over 25% of our entry level products. But these are serious times and there is further serious work ahead of us as we help customers and colleagues face into the highest inflation for 40 years. 

“Covid brought into sharp focus the competitive advantage, flexibility and speed that owning our own manufacturing operations brings. Our 20 food maker operations around the country are playing an important role in helping us to deliver great value and quality to our customers during another difficult period.

“Now that the CMA process has concluded, we are looking forward to working more closely with CD&R as we continue to drive the key pillars of our strategy, focused on being a broader, stronger, popular and accessible business.  I want to thank Morrisons colleagues for their dedication and hard work in helping the business rise once again to meet the new challenges of the cost of living crisis.  Together with CD&R, we are determined that colleagues’ pay, health, well-being and happiness must remain at the very centre of our thinking as we start a new and important phase in the company’s history.”