Morrisons profits plummet as price-war rages
Morrisons’ pre-tax profits slummed to £239m for the six months to 3 August from £344m a year earlier.
Like-for-like sales excluding fuel fell 7.4 per cent from a 1.6 per cent fall a year earlier while online sales contributed 0.4 per cent to overall sales in the same time period.
However, Sir Ian Gibson, non-executive chairman at Morrisons, remained upbeat. He said the industry was experiencing “unprecedented change” but that Morrisons was “well underway with building the foundations for a better future.”
The supermarket has struggled to compete against discount chains like Lidl and Aldi, embarking on a £1bn programme to cut earlier this year.
He assured investors that online shopping and convenience stores would drive market growth.
However, Phil Dorrell, director of retail consultants Retail Remedy, said that this promise will “ring hollow” for many.
“For a retailer that has lagged dangerously far behind the technology curve, the idea that it will become a flag bearer of the next generation of grocery retail will ring hollow. In six months' time, a third of the way through the three-year plan, there will have to be a material boost to the numbers or the great turnaround will be on decidedly shaky ground,” he said.
Dorrell also added that the price-cut strategy is “desperate”.
"My worry is that a strategy that revolves around price cutting is a dangerous one. It certainly betrays a lack of imagination, a reversion to retail type.
"'I'm cheaper screams out 'I'm desperate'. And the discounters Aldi and Lidl, who own this terrain, are closing in.
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"Dalton Philips will be excused this latest set of numbers but if something drastic doesn't happen between now and early next year, the curtain could well fall."