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Morrisons says online groceries ahead of plan, as it plots Kiddicare exit and targets value

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Morrisons today said its new online grocery delivery service was “performing ahead of plan,” as it set out plans to move out of “non-core” activities including nursery retailer Kiddicare and US online grocer Fresh Direct, the companies it bought in order to learn about multichannel.


The move came as Morrisons said it had completed a major strategic review, which will see it spend £1bn to cut prices across the business.

It also came as the supermarket reported turnover of £17.7bn in the year to February 2, 2% down on the same time last year. Like-for-like sales, which strip out the effect of store openings and closures, were down by 2.8%. At the bottom line it turned in a pre-tax loss of £176m from a profit of £879m last time. Next year, it forecast, full-year profits would come in at between £325m and £375m.

Chief executive Dalton Philips said: “The strategy we are announcing today is a bold and comprehensive response to the fundamental structural changes that are taking place in grocery retail.

“We are significantly reducing our cost base and will invest £1bn into our proposition over the next three years, to improve our value even further and to defend and strengthen our competitive position. Customers will see this in our stores as well as in our fast-growing online and convenience offers. At the same time we will exit non-core activities, significantly reduce our capital expenditure and deliver improved operating cashflow and return on capital employed.

“Together with the strategic value of our vertically integrated supply chain, these measures will provide a firm foundation from which to provide outstanding value to our customers and to generate meaningful shareholder returns over the medium term.

“I’m confident that Morrisons will emerge from this period of necessary change as a more focused, more distinctive value leader and well positioned to compete sustainably in the new grocery landscape.”

Morrisons has already set out a strategy that will see it focus on selling through convenience stores and online as well as through large format stores, and that looks set to continue.

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