Bargain hunters boost Morrisons

Check Morrisons shares

Supermarket chain Morrisons has thanked bargain-hungry shoppers for a solid rise in half year profits.

Pre-tax profits before one-offs surged 19% to £295m ($516.7m) in the six months to 3 August from £241m in 2007.

Like-for-like sales - which exclude the effect of new stores - rose 7.6% despite the group facing its "toughest trading environment for many years".

"More shoppers are choosing Morrisons because of our price-crunching deals," the Bradford-based group said.

The group also benefited from the recent petrol price wars with like-for-like sales including fuel surging 31.67%.

Despite the growth in sales and profits, Morrisons shares were down 6% at close, at 253.75 pence.

Cut price

Rising food and fuel costs have prompted shoppers to cut back on their spending. However, Morrisons has received a boost from its image which portrays it as a lower priced alternative to some of its bigger rivals.

The supermarket added that food price inflation had had a significant effect during the period, pushing the price of rice up by 119%, crude oil by 66% and lamb by 32%.

In an effort to lure new customers the group has rebranded and refocused on delivering cut price offers.

Its new focus on slashing the price of every day goods and cheaper lines had helped bring in an additional half a million shoppers every week, the supermarket added.

Looking ahead, the group said it was well placed to continue to take market share as consumers headed to its stores, lured by lower prices as they battle against the current economic conditions.

"The first half profit performance gives us confidence that we will deliver our profit expectations for the year," it said in a statement.