UK's Morrisons Upbeat After Best Quarter For Nine Years
Morrisons made an underlying pretax profit of £193 million ($251 million) - just ahead of analysts' average forecast of £192 million and up from £177 million made in the same period last year.
In its second quarter group like-for-like sales, excluding fuel and VAT sales tax, rose 6.3% - an eleventh straight quarter of growth, having risen 3.6% in the first quarter.
Chief Executive David Potts said second quarter sales were helped by Britain's record-breaking summer heatwave, the soccer World Cup and the Royal Wedding as well as the firm's own initiatives.
Potts, a former Tesco executive, joined Morrisons in 2015 to lead a recovery after it was badly damaged by the rise of discounters Aldi and Lidl in its northern heartland and the strategic errors of previous management.
He is broadening Morrisons' business by improving the performance of its nearly 500 UK stores while also pursuing growth in online and wholesale markets.
He has overseen a steady improvement in trading, driven by more competitive prices, improved product ranges and availability as well as better customer service in refurbished stores.
"Improvements in fresh produce, counters, private label, homewares and clothing augur very well for the business," said Bryan Roberts, global insight director at tcc global.
Potts has also overhauled Morrisons' online strategy through a renegotiated agreement with distributor Ocado and struck wholesale supply deals with Amazon and the McColl's convenience business.
Since the half-year end the group has agreed new wholesale deals to supply MPK Garages forecourt stores and Big C in Thailand.
It said £700 million of annualised wholesale supply sales were now expected to be achieved ahead of initial end-2018 guidance, with £1 billion of annualised sales still expected in due course.
"We are confident that Morrisons has many meaningful and sustainable sales and profit growth opportunities ahead," said Potts.
In April Sainsbury's, Britain's No. 2 supermarket group, agreed a £7.3 billion cash and shares takeover of Walmart's Asda, the No. 3 - a combination that could overtake current market leader Tesco as Britain's biggest supermarket group.
While Morrisons would become No. 3 it would be about a third of the size of Sainsbury's-Asda and Tesco.