Morrisons posts £1.5bn loss for first year under private ownership

Morrisons swung to a pre-tax loss of £1.5bn in its most recent full financial year, the first since the supermarket chain was bought by US private equity firm Clayton, Dubilier & Rice (CD&R).

It marks a dramatic decline from the £201m pre-tax profit made by the grocer in its final year as a public company, in which it made sales of £17.5bn.

CD&R bought Morrisons for £7.1bn in October 2021, following a tense bidding war with rival Fortress. The acquisition saddled the supermarket with £6bn in debt.

A large part of the £1.5bn loss was related to finance costs of £593m, the business claims in its latest filing with Companies House, including interest payments.

Morrisons made an operating loss of £58m before exceptionals in the 65 weeks covered by the report, ending 30 October.

Last year the grocer lost its spot as one of the UK’s top four supermarkets on market share, overtaken by discounter Aldi. According to Kantar data, Aldi remained the fastest growing supermarket in the four weeks to 19 February this year, with a 26.7% year on year sales boost pushing its market share up to 9.4%.

Meanwhile, Morrisons saw its sales slip by 0.9%, taking its market share down to 9%.

READ MORE: Morrisons slumps to £1.5bn pre-tax loss after private equity takeover

Marketing bodies call for ‘rethink’ of Scotland’s proposed alcohol ad bans

The Advertising Association, ISBA and the IPA have issued a joint public statement to “publicly reject” the Scottish government’s proposed alcohol advertising and marketing restrictions, as the public consultation came to an end yesterday (9 March).

Calling the proposals “swingeing”, the statement claims there is “no evidence” that advertising bans will achieve the government’s goal of reducing alcohol consumption harms.

“At the end of the day, we are talking about an impact on Scottish businesses, Scottish jobs and Scottish communities for no discernible benefit,” the marketing bodies argue.

“We call for a fundamental re-think of the proposals with a focus on targeted and practical policies that will facilitate behaviour change without damaging the Scottish economy and the advertising and creative industries that are important to the entrepreneurial Scotland the Scottish government wants to see.”

It’s the first time the three organisations have issued a joint public statement, with additional backing from the Marketing Society Scotland, the British Promotional Merchandise Association, the Cinema Advertising Association, the UK Cinema Association, the Scottish Newspaper Society, and Outsmart.

The government’s proposed restrictions are wide-ranging, from prohibiting alcohol-based sports merchandise, banning ads from public transport and on billboards near schools, new restrictions in print and online, and introducing a watershed for ads on TV.

New restrictions on where alcohol can appear in the retail environment are also on the cards, as well as a ban on the sale or distribution of alcohol-branded merchandise, including shirts, jackets and mugs. The rules could potentially extend to brands’ low- and no-alcohol alternatives as well.

Maree Todd, MSP and minister for public health, women’s health and sport, says alcohol-related harm is “one of the most pressing public health challenges that we face in Scotland”, adding: “By restricting alcohol marketing in Scotland we hope to reduce the appeal of alcohol to our young people.”

Guinness 0.0 unveils ‘biggest ever’ responsible drinking campaign

Ahead of St. Patrick’s Day, Guinness is launching its “biggest ever” responsible drinking campaign for its non-alcoholic beer.

Created with AMV BBDO, ‘Make it a St. Patrick’s Day to remember’ aims to encourage moderation in drinking, while inviting consumers to try Guinness 0.0. Over the course of St. Patrick’s weekend, 50,000 free pints will be made available across Ireland and Northern Ireland in over 300 locations.

Four iconic pub facades will be rebranded as ‘Guinness 0.0 Pubs’, including Dublin’s O’ Donoghues, Galway’s O’ Connell’s, Cork’s O’ Sullivans and Belfast’s Common Market. Meanwhile, 164 Tesco stores in the Republic of Ireland will offer a free four-pack of Guinness 0.0 when they purchase a four-pack of the alcoholic version with their Clubcard.

A film  featuring a chorus of pints signing Bonnie Tyler’s hit song ‘Holding Out For a Hero’ (watch above) will run on social media, with an accompanying Snapchat filter.

UK economy bounces back in January

The UK economy bounced back to growth of 0.3% in January, according to official figures from the Office for National Statistics (ONS).

The news marks a rebound from the 0.1% decline in gross domestic product (GDP) recorded in December.

According to the ONS’s director of economic statistics, Darren Morgan, the return to growth was driven in the main by children returning to school after a period of “unusually high” absences in the lead up to Christmas, and Premier League football clubs returning to their full schedule following the disruption of last year’s winter World Cup.

Private health providers also had a “strong month”, he says, as have postal services as they recover from December’s strikes.

READ MORE: UK economy rebounds in January

People Like Us calls on professionals to use email signatures in fight against ethnicity pay gap

Non-profit People Like Us has launched a campaign encouraging UK professionals to donate space in their email signatures for a petition link, which calls on the government to introduce mandatory ethnicity pay gap reporting.

Created in partnership with Danish creative agency Worth Your While, the ‘Signatures for Signatures’ campaign aims to spread word of the petition among professionals, including those affected by the ethnicity pay gap and their peers.

People Like Us’s goal is to reach 100,000 signatures ahead of the petition closing in May, which will mean the issue is likely to be debated in parliament.

In 2022, research by the non-profit found workers from black, Asian, mixed race and minority ethnic backgrounds are paid 84% of what their white counterparts earn.

While ethnicity pay gap reporting has been debated in parliament over the past two years, there are currently no plans to make it mandatory.

Thursday 9 March

Domino’s hails progress on digital transformation despite lower sales

Domino’s saw its system sales decline 2.8% in 2022 but has hailed the contribution of digital transformation in delivering a “strong performance”.

Sales in 2022 were £1.46bn, down from £1.50bn in 2021. However, revenues for the pizza brand were up 7% from 2021 at £600.3m.

Domino’s also pointed to its like-for-like sales, which exclude the change in the VAT rate, which rose 5.3% year-over-year in 2022.

“We have accelerated the execution of our strategy with the return of national value campaigns, growth in collections, our launch on Just Eat and increased store openings, alongside a strong focus on service from our franchise partners,” interim CEO Elias Diaz Sese said.

“At a time when customers have been looking for great value, Domino’s has delivered, and you can see the results in the numbers we’re announcing today.”

He also praised the company’s “significant strides in digital”. Around 90% of Domino’s total sales are now digital, with over half (52.2%) of online orders made through the app.

The app will continue to be a marketing focus for the brand going into this year. It is aiming to drive new customers to the app and improve conversion and frequency. The brand also says it is “focused on optimising marketing efficiency” while ensuring Domino’s is easy to find for consumers.

Wagamama owner comes under investor pressure to sell off less profitable brands

The owner of Wagamama, The Restaurant Group, is under pressure from activist investors to sell off its less profitable brands including Frankie and Benny’s and Chiquito.

AJ Bell investment director Russ Mould told the BBC investors were pressuring the business to sell off its less profitable brands to focus on Wagamama.

“Rename the business as Wagamama, clear out the rest, and you would have a streamlined and focused operation which might have more appeal to investors,” he said.

The pressure comes as The Restaurant Group announced it will close up to 35 more of its restaurants. The closures will not affect any Wagamama sites and will see it shut down loss-making restaurants.

It attributed the closures to the rising costs of running a restaurant and customers cutting back on spending during the cost of living crisis.

The Restaurant Group saw sales increase to £883m in 2022; however, its pre-tax loss for 2022 rose to £86.8m from £35.2m the year before. Its share value fell by two-thirds last year.

The company has a “clear plan” in place to increase its margins over the next three years and “deliver significant value for all our stakeholders”, CEO Andy Hornby told investors.

READ MORE: Frankie and Benny’s owner to close 35 more restaurants

Adidas undecided on what to do with £1bn of Yeezy goods

Adidas is still weighing up what it will do with €1.2bn (£1bn) worth of Kanye West’s Yeezy line, after it cut ties with the rapper over antisemitic comments.

The end of the partnership in October had already cost the sportswear brand €600m (£534m) in the last three months of 2022. It has now warned investors it could cost the company an additional €500m (£446m) this year.

CEO Bjorn Gulden ruled out burning the Yeezy stock and said the firm is considering selling the products and donating the money to charity. He noted giving the shoes away for free is also complicated, due to the resale value of the products.

Reuters quotes US sneaker resale platform CEO John Mocadlo who says a pair of Yeezy 350 “Zebra” shoes is now selling for between $340 (£303) and $360 (£320), compared to around $260 (£232) four months ago.

Gulden, who only became CEO at the beginning of this year, said ending the partnership with West was the right thing to do, but that it was “very sad” and that it would take time for the company to build a new brand which is equally influential.

READ MORE: Adidas boss eyes turnaround after Kanye West split

CAP issues warning on marketing mini heaters

The Committee for Advertising Practice (CAP) has issued a warning to major advertisers to ensure they are responsibly marketing mini heaters during the cost of living crisis.

The Enforcement Notice sent out by CAP is aimed at ensuring advertisers do not mislead consumers about the money-saving potential of these devices, as people worry about their energy bills during the cost of living crisis.

In January, the Advertising Standards Authority (ASA) banned plug-in four mini heater ads, which claimed the products could heat a room for less cost than switching on central heating.

The ASA asserted this was a false claim, particularly as electricity costs more than gas. This conclusion was backed by energy efficiency and saving organisation The Energy Saving Trust.

The warning issued to retailers requires them to ensure their ads for mini heaters actively reflect what the devices can do. The CAP will be carrying out advanced monitoring in the area, it says.

“During the cost of living crisis, we know that consumers are worried about how they spend their money on essentials. It’s important that ads are honest and not misleading consumers about the best ways to save,” says CAP’s director Shahriar Coupal.

Consumers are cutting back on eating out and clothes

Consumers are adapting to the cost of living by spending less on dining out and clothes, finds data from Barclays.

The data finds two broad camps have emerged during the cost of living crisis. The first are those who kept jobs during the pandemic and were able to build up a savings buffer to cope with rising costs now. This group are cutting down on non-essentials.

The second group are not able to mitigate the effect of rising costs by cutting down on non-essentials. Although they may be working they do not have the resources to adjust to the current cost of living crisis.

Citizens Advice reported it saw more of its clients requiring food bank referrals and charitable support in January than ever before.

Barclays CEO Matt Hammerstein says most of the bank’s customers fall into the first group and are demonstrating “a healthy level of financial resilience”.

“Those fortunate enough to have built up a buffer have been able to accommodate rising living costs more comfortably, with many making reasonable lifestyle adjustments to stay ahead,” he says.

These adjustments include cuts in areas like home improvements, consumers switching to “dupes”, which are lower-priced alternative versions of popular products, and increased searches for discounts on entertainment.

READ MORE: Debt avoided by cutbacks on dining out and clothes, Barclays data shows

Tuesday, 7 March

Greggs claims brand health at an ‘all-time high’

Greggs says its brand health and market share has “never been higher”, thanks in part to the investment it has been making in marketing.

Its efforts have helped to enhance perceptions of the Greggs brand, it claims in its preliminary results for the year ending 31 December 2022, citing the fact it ranks number one among quick service restaurants, coffee shops and delivery services in YouGov’s BrandIndex. Indeed Greggs says it achieved its “highest ever” score last year.

Its marketing investment is also helping to increase the number of food-to-go shoppers considering the brand and intending to purchase, with consumers now converting at a “record level” of 42%.

All this has helped boost Greggs’ share of the food-to-go market, which now stands at 7.7% based on data from NPD CREST for Q4 2022.

“We want Greggs to be the food-on-the-go brand of choice for more people, more of the time,” says CEO Roisin Currie. “Effective customer relationship management is crucial for this: our emails, text messages, web and app personalisation, and targeted social adverts help us to keep our customers informed and engaged. We continue to invest in and improve these as part of our digital workstream.”

The Greggs app is playing a crucial role in building loyalty, the brand says, through which customers can earn stamps and redeem rewards for their purchases. In the last quarter of 2022 the app had 1.1 million individual active users, up from 0.4 million in the same quarter a year prior, with customers scanning the app in 8.1% of company-managed shop transactions.

Greggs opened 186 new shops in 2022 and closed 39, taking its total estate to 2,328 by the end of the year. It continued its expansion in retail parks and Central London locations, such as Leicester Square, as well as key transport hubs including Liverpool Street Station and Birmingham and Liverpool airports.

It is planning 150 net openings in 2023, with its ultimate ambition to have “significantly more” than 3,000 shops in the UK.

Greggs has reported a 23% uplift in sales for the year to £1.5bn compared to £1.2bn in 2021. Meanwhile, pre-tax profit is up 1.9% to £148.3m versus £145.6m the year before.

Currie says describes 2022 as a “year of strong progress” for Greggs, “the result of committed efforts to deliver our strategic growth plan”.

“The significant opportunities on which the plan is based will remain centre stage in the year ahead as we make Greggs more accessible to even more customers. Although consumer incomes remain under pressure, Greggs continues to offer exceptional value to people looking for great tasting, high-quality food and drink on-the-go,” she adds.

“We have an exciting, ambitious plan for the years ahead and, by continuing to nurture what makes Greggs special, I believe we are extremely well-placed to realise the opportunity to become a significantly larger, multi-channel business.”

Starbucks to invest £30m in new and existing UK stores

Starbucks plans to open 100 new stores in the UK this year, an apparent U-turn after reports it was looking to sell its British operations last year.

The US coffee shop chain has also committed to investing millions in upgrading its existing outlets, taking the total investment up to £30m.

Starbucks has 1,066 cafes in the UK, around 30% of which it operates directly, with the others run by franchisees. The renovation plan will cover all company-owned stores and take place over the next three years.

The firm had reportedly been considering selling the UK arm of its operation following a difficult few years in light of the pandemic. However, the company reported stronger financial results for 2022, including revenues of £449m and gross profit of £129m. Its profit before tax was not higher, though, as it paid £60m more for products and £26m extra on staff, according to The Guardian.

Its tax bill was lower though, with Starbucks paying £4.6m in corporation tax for the year to 2 October 2022, compared to £5.4m the year prior.

READ MORE: Starbucks to open 100 new UK coffee shops as tax bill on British sales falls

Tesla makes further price cuts

Tesla has slashed the price of some of its electric car models again as it looks to boost sales and contend with competitor reductions.

The latest round of price cuts come just a few weeks after the car marque owned by Elon Musk took up to 20% of the cost of some of its vehicles.

The most recent cuts vary between model and market, with reductions seen on the company’s website in the UK, US and across Europe.

In the UK, the cost of some versions of the Model 3 have dropped by about 6% from £60,090 to £56,540. In the US, discounts range from 4% to 9% and apply to its most expensive models, the Model S and Model X.

Musk warned in January that he believed it was going to be a “pretty difficult recession”. And last week on a presentation to investors he described people’s ability to pay for a Tesla as the “limiting factor” as “desire… is extremely high” to own one, he claimed.

When Tesla made the first round of price cuts in January, Marketing Week columnist Mark Ritson warned the brand was opening itself up for a price war, as well as “communicating its weakness to existing and future customers”.

READ MORE: Elon Musk’s Tesla cuts prices again as tries to boost sales

HelloFresh boosts orders in 2022 amid cost of living crunch

Meal kit provider HelloFresh has reported revenue growth of 27% to €7.6bn for the 2022 financial year, despite being confronted with a number of “previously unseen macroeconomic challenges”.

The brand’s adjusted earnings before interest, taxes, depreciation and amortisation reached €477m with a margin of 6.3%. This compares to a margin of 8.8% in 2021.

Over the year, HelloFresh shipped more than 1 billion meals, a new milestone for the company, with average order value up by 10% in constant currency across the year and 12% in the fourth quarter alone. This was driven by the fact customers ordered more meals per transaction, as well as increasing their take-up of add-on products.

Dominik Richter, co-founder and CEO of HelloFresh says 2022 presented the business with a “whole new set of challenges that our teams worked very hard on to tackle”.

“While we continue to face a difficult macro environment, we still posted healthy growth rates and maintained strong levels of profitability,” he adds. “We also successfully managed to relentlessly mitigate inflationary pressures and ensure that our prices remain competitive compared to grocery stores.

“Additionally, we meaningfully increased average order value in the first year post pandemic and launched our services not only in Ireland and Spain as new geographies, but also expanded our brands Green Chef to the Netherlands and Factor to Canada.”

Retail sales up in February but volumes remain down

Total retail sales increased by 5.2% in February, holding up “better than expected” thanks to a Valentine’s Day boost, but volumes remain down on 2021.

The sales increase is below the three month average growth of 5.5% but above the 12-month average growth of 2.4%, according to the latest BRC-KPMG Retail Sales Monitor.

Meanwhile, like-for-like retail sales were up 4.9% in February against an increase of 2.7% in 2022.

Non-food sales increased by 3.2% on a total basis and 2.7% on a like-for-like basis over the three months to February. In-store non-food sales increased by 8.1% over the period and 7.3% on a like-for-like basis, but this is below the 12-month average growth of 10.8%.

Online non-food sales decreased by 3.1% last month against a decline of 28.4% in February 2022.

Total food sales increased by 8.3% and 8.2% on a like-for-like basis over the three months to the end of February.

Paul Martin, UK head of retail at KPMG, adds: “With overall inflation running at around 10%, and food inflation sitting nearer 20%, total sales growth for February of just 5% will be eating hard into retail margins and masking the true state of the sector’s health.

“Consumers are continuing to hold back on non-essential spending with sales of clothing, footwear and accessories, which have been very influential in spending for many months, continuing to decline in February. Furniture and homeware have been driving sales growth on the high street and online but we are starting to see more categories record negative sales year on year, as household budgets remain squeezed.”

With increases in energy, broadband, mobile phone and council tax bills looming he says consumers will continue to “take steps to reduce spend where they can”, which will mean “switching where they shop, what they buy, while also cutting back on activities, such as eating out and takeaways”.

“As much of the growth in retail is being driven by inflation, price and promotional strategies have become increasingly important growth engines for retailers. Online retailers will also have to review their business models, and there are likely to be some failures in this space, particularly among the businesses that are currently over-valued following the surge in demand during the pandemic which has now decelerated,” he adds.

Monday, 6 March

Source: Shutterstock

Twitter revenue drops 40%, according to reports

Twitter revenues dropped by around 40% in December, compared with the same month in 2021, according to a report from the Wall Street Journal.

The drop in revenue comes after advertisers pulled out of working with the troubled social media platform following Elon Musk’s takeover in October last year.

More than two thirds of the platform’s top 100 advertisers before the acquisition took place haven’t continued working with the company, the report claims.

The likes of Apple and Amazon, which did initially hesitate on continuing to advertise with Twitter, returned to the platform.

It’s also reported that Twitter has made the first interest payment on the $13bn (£10.8bn) loan Musk took out to finance the purchase.

READ MORE: Twitter’s Revenue, Adjusted Earnings Fell About 40% in Month of December (£)

Sainsbury’s convenience stores reach £3bn in sales

Sainsbury’s convenience business, which is made up of 800 stores across the UK, has grown 10% in the financial year to date, and is up 7% on pre-pandemic levels, the company said on Friday (3 March) as the stores reach £3bn in sales for the first time.

The supermarket plans to open 20 more convenience stores in 2023, having opened 12 in 2022. It said the locations for the stores are “carefully selected to ensure they will best serve customers and are tailored to suit the needs of each community”.

The bulk of the company’s retail estate is in its ‘Locals’ format, and more than 130 of this design specifically cater for “busy customers” looking for ‘food-on-the-move’ in urban areas, the supermarket said.

“We know how much customers value being able to shop when and how they want, particularly in the post-pandemic world,” says Clo Moriarty, Sainsbury’s retail and digital director.

“Convenience is a growing part of our business and seeing our convenience stores reach today’s £3bn sales milestone is a huge achievement and testament to how we are delivering what customers want,” she adds.

Toblerone to change packaging following production move

Toblerone is removing the Matterhorn mountain from its packaging as the company moves some of its production from Switzerland, where the mountain stands, to Slovakia.

Switzerland’s marketing rules mean the brand has to change its packaging, and will instead feature a “distinctive new Toblerone typeface and logo that draw further inspiration from the Toblerone archives and the inclusion of our founder, Tobler’s, signature,” the brand told the BBC.

The packaging’s copy will be shifted to “established in Switzerland” rather than “of Switzerland”. Toblerone has featured the Matterhorn packaging on its products since 1970.

READ MORE: Toblerone: Swiss rules mean chocolate bar to drop Matterhorn from packaging

Leon founder blames food shortages on ‘weird supermarket culture’

The co-founder of the food chain Leon, Henry Dimbleby, has blamed the UK’s “weird supermarket culture” for recent food shortages.

Dimbleby, who advises the government on food policy, told the Guardian: “There’s just this weird supermarket culture. A weird competitive dynamic that’s emerged in the UK, and nowhere else in the world has it, and I don’t know why that is.”

He added that the current conversation around what fruit and vegetables consumers can and cannot purchase, such as turnips, is “frustrating” given a lack of focus on “much bigger structural issues that need to resolve”.

“The government on health has very explicitly gone backwards,” he added.

He said that because UK food prices are kept at a similar rate whether there’s a shortage or not, farmers aren’t able to sell all their produce when they have an excess, or aren’t incentivised to produce more in a shortage.

“If there’s bad weather across Europe, because there’s a scarcity supermarkets put their prices up – but not in the UK. And therefore at the margin, the suppliers will supply to France, Germany, Ukraine,” he added.

READ MORE: Food tsar blames shortages on UK’s ‘weird supermarket culture’

Kellogg’s marks 25^th breakfast club anniversary

Kellogg’s has launched a new brand platform, ‘Better Days are Built on Breakfast’, to celebrate the brand’s 25^th anniversary of supporting breakfast clubs in the UK.

The new film aims to raise awareness of Kellogg’s work with breakfast clubs and foodbanks, as the brand looks to increase the size and reach of the programme.

Across 25 years, Kellogg’s has worked with 5,000 schools and donated £5m through the breakfast club programme, and this year wants to support “another 50% of schools” and reach 20,000 more children.

The 30-second film gives insight into the homes of a range of people, showing how they experience breakfast. The voiceover says “it’s something everyone deserves” before explaining how not everyone has access to it.

“We believe every child should start the day with a full tummy, as being hungry can affect how focused they are in class and reduce their mood and ability to learn,” says Christine O’Brien, marketing director at Kellogg’s.

“Breakfast clubs have really been there for thousands of children in the 25 years that we have been supporting them and our new advert truly brings to life the difference that they make.’’

The campaign was created with agency Leo Burnett.