Preliminary Results for the Year Ended 3 February 2013

Good strategic progress in a tough trading year

 

Financial summary

 

·         Turnover up 3% to £18.1bn (2011/12: £17.7bn)

·         Like-for-like sales (ex-fuel, ex-VAT) down 2.1%(1) (2011/12: up 1.8%)

·         Underlying profit before tax down 4% to £901m (2011/12: £935m)(2)

·         Profit before tax £879m (2011/12: £947m)

·         Earnings per share 26.7p (2011/12: 26.7p)

·         Underlying earnings per share up 7% to 27.3p (2011/12: 25.6p)

·         Total dividend for the year up 10% to 11.8p (2011/12: 10.7p) – dividend cover of 2.3 times (2011/12: 2.4 times)

·         Net debt £2,181m (2011/12: £1,471m) after capital investment of £1,016m (2011/12: £901m)

·         Equity retirement £579m in the year(3), (2011/12: £368m).  Programme now completed

 

Strategic highlights

 

·         Fresh Formats –  tailored fresh food proposition now in over 100 stores – and continuing to perform to plan: programme to expand in 2013/14

·         Vertical integration – good progress on expanding manufacturing capability;  Winsford fresh meat facility and fresh seafood site in Grimsby operational and performing well

·         Catalina voucher at till system implemented in all stores

·         Convenience first 12 M local convenience stores performing well; first stores in London now open; accelerated target established for 2013/14; West London convenience distribution centre (CDC) open; additional CDC to support expansion in the North of England

·         Multi-channel – Morrisons Cellar successfully launched; three new Kiddicare stores opened; Online – Morrisons first online food operation to launch in  2014

 

 

Operating highlights

 

·         17 new supermarkets opened (4) 

·         5,000 own brand products successfully launched; M savers the fastest growing own label value brand (5) – sales up 37%

·         4% productivity improvements in stores and distribution

·         IT systems replacement programme on track – providing foundation for accelerated cost savings in 2013/14

·         Financial discipline maintained through rephasing of planned investment in new stores: £200m reduction in capital expenditure  

·         Grocer of the Year and Employer of the Year (6)

 

 

Commenting on the results, Sir Ian Gibson, Chairman, said:

 

“Although this has been a difficult year in trading terms for Morrisons as we struggled to grow sales in a tough consumer environment, we have delivered a 7% improvement in underlying earnings per share and announced a 10% dividend increase, in line with our previously stated policy.  It has also been a period of significant strategic progress as we continue to lay the foundations for future growth”.

 

 

Dalton Philips, Chief Executive, said:

 

The sustained pressure on consumer spending was reflected in our like-for-like sales performance, which was not as good as it should have been. We have implemented a range of measures to address this and are making good progress in improving our promotional effectiveness and in communicating our points of difference. Recent events have underlined why it’s so important that we tell our customers how and why we’re different and what our vertical integration really means for them. Food quality, provenance and the issue of trust are at the forefront of consumers’ minds and these are all areas where Morrisons has something genuinely different to offer.

 

We continue to invest for the long term success of our business. Our fresh format offer is now in over 100 stores nationwide and we will continue to tailor the concept as we expand the rollout during the coming year. We are ready to accelerate the development of our multi-channel presence and our convenience operation is gaining real momentum acquiring over 60 new sites in recent weeks alone. We are therefore increasing our target for store openings in the coming year by 40% and now plan to have 100 stores trading by the end of the year.      

 

Today’s announcement that we are launching an online food offer in 2014 is another important step in Morrisons strategy of being ‘Different and Better than Ever’.  We may be a late entrant to the online food market but we have learnt from our involvement with Kiddicare and Fresh Direct. We have long been a leader in fresh food and our craft skills and vertical integration really set us apart from the competition. Ensuring that these points of difference translate into our online food offer will be a priority.” 

 

Outlook

 

We will continue to implement a wide range of measures to address the sales performance of the business and progress our strategic initiatives, in order to provide a platform for successful long term growth. Our expectations are that   the challenging consumer and market environment we saw in 2012 will persist through the coming year.

 

 

 

 

 

Enquiries

 

Wm Morrison Supermarkets PLC

Richard Pennycook                                 0845 611 5000

 

Investor Relations

Niall Addison                                                07764 624701

 

Media            

Wm Morrison Supermarkets:                    

Richard Taylor                                              0845 611 6912

Julian Bailey                                                 07969 061092

 

Citigate Dewe Rogerson:                          

Simon Rigby                                                 020 7638 9571

Kevin Smith                                                  020 7638 9571

 

 

Unless otherwise stated all results for 2012/13 relate to the 53 weeks ended 3 February 2013 and 2011/12 results are for the 52 weeks ended 29 January 2012

 

Notes

1                     2012/13: 53 weeks to 3 February 2013 against 53 weeks to 5 February 2012

2                     Underlying profit before taxation, property disposals, multi-channel and convenience development costs and IAS19 pension interest. Underlying operating profit is operating profit before property disposals

3                     Including acquisition of Treasury shares

4           Including three replacement stores: excludes convenience stores

5              Kantar Worldpanel

6           The Grocer Gold Awards 2012

 

 

The Group’s full financial statements (comprising the consolidated statement of comprehensive income, consolidated balance sheet, consolidated statement of changes in equity, consolidated cash flow statement and related notes) are available for download on the Group’s website at www.morrisonsplc.co.uk.

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