Morrisons sales edge higher despite 'softer' market

26th Sep 2024 12:10

(Sharecast News) - Morrisons posted an uptick in third-quarter sales on Thursday, as it confirmed a £331m property deal intended to cut debts.

The supermarket chain, which is owned by US private equity firm Clayton, Dubilier & Rice, said group like-for-like sales excluding both fuel and VAT rose 2.9% in the three months to 28 July. Total sales excluding fuel were up 2.1%.

Own-brand fashion range Nutmeg reported an 8% increased in sales, while Back to School revenues jumped 23%, the retailer added.

Rami Baitieh, who took over as chief executive a year ago, said: "Like-for-like sales remained positive, the switching data improved year-on-year and although the market was noticeably softer in the third quarter, our relative position improved and our market share stabilised.

"Availability improved further, helped by the installation of AI-powered availability cameras in the majority of our stores.

"Loyalty remains a key focus for us. The current quarter will be transformation one for the More Card, with the introduction of a number of new elements."

Chief financial officer Jo Goff added that all units, including online, convenience and wholesale, had shown good growth.

She also confirmed a group debt transaction with net proceeds of £331m, after ground leases on 76 supermarkets were sold. Morrisons currently has around 500 stores.

According to Sky News, which first reported the transaction on Wednesday, the deal was struck with investment firm Song Capital.

In a statement, Goff said: "The properties will remain under Morrisons' control and our retail estate remains over 80% freehold.

"This transaction follows the deleveraging from the disposal of our forecourt business at the start of the quarter, and if the proceeds from this transaction were also used to reduce debt, on a pro-forma basis our debt would be £3.6bn."

Morrison' debt reached £8.6bn at the end of last year. It stood at £3.2bn when it was taken over by CD&R in October 2021, in a highly-leveraged £7bn deal.

Since then Morrisons has been hit by higher interest payments - making debt more expensive to service - as well as surging inflation, the cost of living crisis and stiff competition, especially from discounters Aldi and Lidl.

Baitieh joined from French retailer Carrefour in October 2023, replacing David Potts, who had been at the helm for nine years.