Morrisons announces UK-wide store closures as profits dive

Supermarket chain Morrisons has revealed a stabilisation strategy that involves the closure of stores across the UK, as its profits nosedived in the first half of 2015.

As part of an ongoing restructuring process that Morrisons hopes will strengthen its long-term prospects, the company plans on closing 11 stores in the next 26-week period. Doing so is expected to incur £20m in costs and could lead to the loss of 900 jobs.

In the 26 weeks ending August 2, Morrisons’ pre-tax profit dropped to £126m from £239m at the same point in 2014, while its revenue fell by £432m to around £8.1bn.

The closures follow yesterday’s (September 9) announcement that Morrisons has agreed to sell its 140-strong chain of M Local convenience stores for around £25m. The BBC reported that the buyer team, led by entrepreneur Mike Greene, has plans to rebrand the stores as ‘My Local’.

David Potts, Morrisons’ chief executive, said: “The immediate priority is to deliver a better shopping trip to stabilise trading performance. Our [strategy] will then deliver improvement in the core supermarkets, where we have the greatest opportunity.

“It will be a long journey. We approach the challenge with energy, confidence and many strengths, particularly our strong balance sheet and cash flow, which enables investment in improving the customer shopping trip.”

Elsewhere, total takings from fuel sales at the company’s petrol stations fell by 16% to £1.6bn, although Morrisons has attributed the drop to deflation, with lowered oil prices passed on to its customers.

Discussing recent changes to Morrisons’ executive team, company chairman Andrew Higginson said: “David has very quickly formed a new team that combines the best of Morrisons home-grown and external talent.

“I am also delighted that two new non-executive directors - Belinda Richards and Irwin Lee - have recently joined and strengthened the Board. They bring a wealth of experience, which will prove invaluable to Morrisons.”

He added: “During the first half, the team has made good progress in starting the turnaround journey. Whilst the management team need time to settle in, make the changes they see as important, and build trading momentum, I believe the team will deliver much improved profits.”