The Bradford-based retailer reported a pre-tax profit of £345m, down 52% over the previous year, while sliding to a significant £792m pre-tax loss for the year ending February 1.
Total sales, meanwhile, fell 4.9% to £16.8bn – a drop just shy of £1bn over the previous year. Like-for-like sales have also significantly fallen; down 5.9% compared to a fall of 2.8% in 2013/14.
The unprofitable store closures, which will result in over 300 job losses and are part of a wider review into the health of Morrisons’ convenience business which will see it ‘significantly slow’ store openings, represents the latest turmoil for UK supermarkets after Tesco recently announced the closure of 43 unprofitable stores after its own sales fell sharply. Asda and Sainsbury’s have also seen sales fall as of late, with all the big four losing customers to the German discounters.
Despite the poor performance, Morrisons chairman Andy Higginson remains resolute. “Last year’s trading environment was tough, and we don’t expect any change this year,” he said. “However, Morrisons is a strong, distinctive business – we own most of our supermarkets, have strong cash flow, and are famous with customers for great quality fresh food at low prices. This gives us a good platform.”
Morrisons said it achieved £104m of savings over the period on promotional investment and sourcing as part of its goal to save £500m over three years.
This included the reduction of more than 2,500 SKUs (over 10%) as the struggling retailer streamlines its product range.
“Range reduction and streamlined promotions remains a key future cost saving opportunity, as are the related areas of refining our marketing spend and utilising Match & More data,” added Higginson.
Retail Remedy analyst Phil Dorrell believes Morrisons must revamp its marketing if any sort of turnaround is to start to take shape.
“Despite its multiple problems, Morrisons remains a solid business – or at least it would be if it could get its offer right,” he explained. ‘It needs an overhaul to convince people it is attractive again.
“The marketing over the last few years has been dire, from Ant and Dec to Market Street, and has done nothing to change its tired public image. The brand needs to be much bolder if it is to recapture the distinctive market niche that it created and then lost.”
New chief executive, and former Tesco man, David Potts will start in the business from 16 March. But despite today’s falling sales and Morrisons’ £1.3bn write-down of its property portfolio, Higginson says he will be joining a business looking forward.
“Under his leadership, we will focus on building trading momentum and being more like the Morrisons our customers expect,” added Higginson.
“We will invest more into the proposition and put customers at the heart of everything we do. We will listen and respond to our customers, and work hard every day to improve the shopping trip.”