Morrisons update on Q3 trading for 13 weeks ended 31 July 2022

Highlights

• Total revenue up 4.5% to £4.8bn
• Group like-for-like (LFL) sales ex-fuel/excluding VAT of (3.1)%
• Adjusted EBITDA of £177m
• On a three year basis Q3 Group LFL excluding fuel was up 4.8%; and up 8% including fuel
• Acquisition of McColl’s in May 2022 delivering key opportunity to expand convenience footprint and be closer to our customers
• Continued programme of price investment initiatives to support customers through cost of living crisis
• Further investment in digital capabilities

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

Morrisons has today updated investors on Q3 trading for the 13 weeks ending 31 July 2022. With record inflation, rising interest rates and energy prices at unprecedented levels, consumer sentiment continues to be very subdued.

Group revenue for the quarter was up 4.5% from £4.58bn last year to £4.79bn and Group like for like sales, excluding fuel, improved from the previous quarter to (3.1)%. Looking through the pandemic, on a three year basis Q3 Group LFL excluding fuel was up 4.8%, and up 8% including fuel.

Adjusted EBITDA was £177m, down from £356m last year reflecting a number of temporary and transitional factors - some of which are expected to reverse in Q4 - and our year-end change. During the period we also experienced unprecedented inflationary pressures in our own food manufacturing operations. As a foodmaker we feel the effects of inflation earlier than other retailers, but conversely are able to recover more quickly when inflation falls. The business exited the quarter in a stronger position, with good momentum, and we anticipate this continuing into Q4.

David Potts, Morrisons Chief Executive, said:

“It’s clear that the cost of living crisis is starting to change customer shopping patterns in many ways. The speed, scale and severity of cost and energy price increases, exacerbated by the terrible war in Ukraine, had significant impacts through the quarter, but the market is still growing and the energy price guarantee will ease pressure on consumers.

“We are doing everything we can to keep prices down for customers. Last quarter we introduced one of our biggest ever price cut campaigns and in Q3 we introduced our popular Summer Collector scheme. Earlier this week we announced another significant price cut programme across 150 of our most popular products and tomorrow we are launching a timely fuel promotion - with 5p a litre off with a £40 spend in store - to help customers with the high cost of motoring.

“Importantly, we are adjusting and adapting, with ongoing investment in our customer proposition including exciting plans for McColl’s which we’re confident will continue to grow our convenience offering and footprint. We are also improving our digital capabilities and investing strongly in our My Morrisons card and app, helping us to incentivise and reward our customers in a more personalised and targeted way.

“I want to thank all Morrisons colleagues for their continued hard work and dedication to helping our customers through an exceptionally difficult period for UK consumers. They continue to be a beacon of compassion and consideration - and the affection and appreciation that our customers have for their work is evident every day.”