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Morrisons works to catch up online as sales and profits dip; Ocado updates on its figures

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Morrisons chief executive Dalton Philips today said the supermarket was working to get back on the front foot with “decisive action” including the development of online and convenience to meet “the challenges of structural change” in the industry.

His comments came as Morrisons reported turnover down by 4.9% to £8.5bn in the half-year to August 3, from £8.9bn last time. Like-for-like sales fell by 7.4%, and pre-tax profits fell by 30.5% to £239m from £344m last time.

The company is now putting in place a three-year £1bn transformation plan around central actions including reducing prices and range, simplifying in-store management structures and cutting promotions, as well as rolling out online and convenience through its M local stores. Online and convenience are ultimately expected to function as growth channels for the business, but new business developments costs came in at £38m for both in the half year.

Chief executive Dalton Philips said: “Our new growth channels – online and convenience – are progressing well, and our cost-savings and cash flow plans are both on track to achieve our ambitious three-year targets.

“Although it is too early to see the benefits of the three-year plan in the sales line, Morrisons is getting back on the front foot, and implementing change and innovation at real pace throughout the business. We are meeting the challenges of structural change with decisive action and are on track to become a more distinctive value retailer for the next generation of grocery retail.”

Meanwhile, Ocado , whose technology powers the Morrisons online service, reported sales up by 22.5% to £231.9m in the 12 weeks to August 10, with retail sales up by 15.5% at £218.5m. It said average orders numbers had grown by 17.4% to 163,000, while average order sizes had dipped by 1.7% to £111.64, from £113.54 at the same time last year.

Tim Steiner, chief executive of Ocado, said: “We are pleased with the continued steady growth in our business despite the increasingly competitive nature of the market. We remain committed to continually improving the quality of the offer to customers, which we believe will support continued growth.

“This performance also further demonstrates the ongoing shift to online grocery shopping.”

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