Supermarket Morrisons has logged a surprise rise in profits for the year, driven in part by shoppers stocking up ahead of a coronavirus lockdown.
The chain reported adjusted pre-tax profits of £435m compared to £406m year-to-year, despite like-for-like sales falling 0.8%. The Board declared a final dividend of 4.84p for a full-year pay-out of 8.77p compared to 12.6p the previous year and share price rose 6%.
With like for like sales now flat, rather than in decline, Morrisons is chipper about its position. “Morrisons is operating from a very robust financial position,” says the company. “We have a strong balance sheet, with low debt and a strong maturity profile. Cash flows and liquidity are also very strong. As at the end of 2019/20, we had cash and cash-equivalents of £305m and access to undrawn revolving credit facilities (RCFs) of £1.45bn. Our store portfolio is overwhelmingly freehold (87%), and our pensions are in surplus.”
Commenting on the results, Andrew Higginson, Chair, and David Potts, Chief Executive, says: “We are currently facing unprecedented challenges and uncertainty dealing with COVID- 19. Looking after our colleagues and customers is our priority, ensuring that we have a clean, safe place to shop and work.”
He continues: “At Morrisons, we have a strong, experienced, and above all, determined team of the best food makers and shopkeepers in Britain. We promise to work as hard as we can for customers, suppliers, and all stakeholders to keep our shops operating as smoothly as possible. Thank you to all our colleagues for your incredible efforts so far.”
The company has recently stated it is to add 3500 new staff to its online delivery arm, offering more pickers, drivers and admin to cope with the Coronavirus outbreak. It is also planning to pay all its staff come what may.
Joe Healey, Investment Research Analyst at The Share Centre adds a note of caution, however: “Some of the lighter news this morning comes from the retail sector with Morrisons up roughly 6% following the release of their annual results and the supportive UK government announcement yesterday. What investors will have taken comfort in these results is the response from management towards the virus outlook. The retailer has committed to ensuring colleagues, customers and suppliers’ transparency providing immediate payments, pay guarantees and the expansion of their online services to customers. As we have seen in recent days through Ocado, the online proposition for grocery deliveries is appealing particularly in times like these so it makes sense to focus efforts on this segment.”