Morrisons sees surge in profits

Morrisons stores will soon have a new look

Supermarket Morrisons has almost doubled its half-year profits despite tougher market conditions.

Pre-tax profits for the 25 weeks to 29 July jumped to £266.3m ($537m) from £134.2m for the same period last year.

Like-for-like sales excluding fuel - which strip out the effects of new stores - grew 3% in the seven weeks since the end of July.

The rise came despite a sales slowdown towards the end of the period as a result of rising rates and bad weather.

Shares in the group gained on the news, rising 7.5 pence, or almost 3%, to 285.25p in early trade in London.

The results are the first to since the group launched a rebranding and revamp in March this year.

Shake-up

The Bradford-based group has been trying to turnaround its fortunes since its 2004 takeover of rival Safeway pushed it into the red.

In March, Morrisons unveiled full-year pre-tax profits of £331m, up from £54m the previous year.

The group added that its three-year Optimisation Plan - which include rebranding itself with a new logo and slogan - had helped boost margins and cut costs.

However, while the year started well, the group warned that it had experienced a "marked slowdown" towards the end of the reporting period.

It blamed rising interest rates - which cut into consumer spending - as well as poor weather and increased competition for the tougher sales environment.

Morrisons also warned that consumers face a rise in food prices after steep increases in the cost of meat, flour and milk following a poor growing season for farmers.

As well as shaking up the business, chairman Sir Ken Morrison announced in July his intention to resign.

Sir Ian Gibson, chairman of newspaper group Trinity Mirror, will takeover the post in March 2008 - a move that will mark the first time a non-family member has headed the firm since it was founded in 1899.