Page last updated at 16:01 GMT, Thursday, 12 March 2009

Upbeat Morrisons sees profit rise

Chief executive of Morrisons Marc Bolland says shoppers are leaving rivals

Supermarket chain Morrisons has said it is making "good progress" after reporting a 7% increase in annual pre-tax profits to 655m ($902m).

The UK's fourth-biggest grocer said like-for-like sales excluding petrol were up 7.9% on the year.

The Bradford-based group also said it viewed "both the short and long term outlook for Morrisons positively".

The competitive landscape is "extremely challenging", it said, but "the group's balance sheet is strong".

Value focus

"'This was another year of good progress for Morrisons as we continued to grow sales, profits and dividends, whilst also investing to generate future growth," said chairman Sir Ian Gibson.

The group's cost conscious ethos continues to deliver
Keith Bowman, Hargreaves Lansdown Stockbrokers

The supermarket chain - which earlier this year said it had enjoyed "excellent" sales over Christmas - has seen strong growth in sales of its budget food ranges, with sales of its "Value" range up 50% over the year.

"These are challenging times for the UK economy, but whilst we are not complacent, we are confident that Morrisons' offer meets and is in tune with the demands of our customers and the economic background," Sir Ian said.

The retailer said that its share of the UK grocery market, based on data from research firm TNS, had risen to 12.3% from 12.1% over the year.

Morrisons chief executive Marc Bolland told the BBC that the company was drawing customers away from "all of our main competitors".

"They came from the main big three [Tesco, Sainsbury's and Asda] but they also came from the premium segments," he said.

Expansion plans

Morrisons also announced that it was scrapping previously-announced plans to buy back its shares, saying that it would use the money to invest in the business instead.

The retailer had used much of the money earmarked for share buy-backs last year in acquiring 38 stores from the Co-operative Group in December.

And it said because "further investment opportunities" may arise in the medium term, it was going to hold on to the money that it would have spent on share buy-backs this year in order to give it "maximum financial flexibility".

Last year, the company opened nine new stores, and it said it expected to open about 350,000 square feet of new retail space this year, in addition to the stores it had bought from the Co-operative Group.

"We have identified significant potential to attract new customers and will focus on space growth in order to take us from a national to a nationwide company," it said.

Underlying profits for the year to 1 February, which strip out the impact of property gains, were up 13% to 636m, which was better than analysts' expectations.

"The group's cost conscious ethos continues to deliver," said Keith Bowman, equity analyst at Hargreaves Lansdown Stockbrokers.

"Sales growth remains impressive, whilst profits have made solid progress and the group's finances display rock solid characteristics."

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