Morrisons sales rise in Q2 as it expands convenience estate

25th Jun 2024 11:02

(Sharecast News) - Supermarket operator Morrisons reported a strong second-quarter performance on Tuesday, with continued sales momentum, significant operational progress, and substantial deleveraging.

The grocery retailer, owned by US private equity outfit Clayton, Dubilier & Rice, said group like-for-like sales excluding fuel and VAT grew 4.1% for the period, up from 1.0% in the prior year.

Total sales excluding fuel rose 3.7% to £3.8bn, while underlying EBITDA for the first half, excluding the fuel business, climbed 16% to £321m.

The company said it made strides across its three strategic pillars - commercial excellence, operations optimisation, and new value creation.

That included the £2.5bn sale of its petrol station business to MFG, now successfully completed.

Morrisons also invested further in its Morrisons More Card loyalty programme, with the swipe rate now at about 50% and aiming for 70% in the medium term.

The company also reported a significant milestone in debt reduction, successfully concluding a tender in June.

Group debt was reduced by 35% to £4bn, down from a peak of around £6.2n.

Additionally, the company acquired 38 convenience stores in the Channel Islands from SandpiperCI and completed the McColl's conversion programme, now targeting a total of 2,000 Morrisons Daily-branded convenience stores across the UK by 2025.

"I am pleased with the overall performance of the business in the second quarter with supermarkets, convenience, wholesale and online all delivering growth and contributing to a 4.1% increase in like-for-like sales," said chief executive officer Rami Baitiéh.

"Over the last eight months we have listened carefully to over 340,000 customers, colleagues and suppliers and the insights from this exercise are helping to refine and shape the activity in all three pillars of our strategy: commercial excellence, operations optimisation and new value creation.

"It's clear that availability and our loyalty scheme are the two areas our customers talk about the most and so we are focusing intensively on these areas."

Baitiéh said convenience remained an "important and strongly growing" channel for the retailer, adding that with the McColl's conversion programme now complete and the recent acquisition of 38 stores in the Channel Islands, it had over 1,600 Morrisons Daily convenience stores across the country, about two thirds of which were wholly owned.

"With this strong growth trajectory we are now targeting a total of 2,000 convenience stores in 2025.

"Customer reaction to the significant investments we have made in the More Card has been very positive.

"We now have over five million active customers, and transactions using the card have grown by around 35% in the last eight months.

"We are now targeting 70% of transactions to be through the More Card over the medium term."

Reporting by Josh White for Sharecast.com.