Morrisons CEO: 50% profit fall a ‘badge of honour’

Bradford-based supermarket giant Morrisons said on Thursday its revenue edged 0.4% higher to £17.6 billion in the 52 weeks to January 31, 2021, and profit before tax and exceptionals fell 50.7% to £201 million, including £290 million direct COVID-19 costs “to help feed the nation through the crisis.”

Morrisons said profit before tax and exceptionals would have been up 5.6% to £431 million before the payment of £230 million of waived government business rates relief.

“I personally wear a halving of profits as a badge of honour,” Morrisons CEO David Potts told reporters.

“The British people have had access to food because the supermarket workers, not just Morrisons, were asked by government to be key workers and required to stay open, unlike pretty much the rest of society.

“Frankly we could have made no profit and it would have been a result.”

Online sales tripled during the year. “Morrisons on Amazon” is now available in about 50 towns and cities and accounts for more than 10% of sales.

There has been persistent market speculation that Amazon could emerge as a possible bidder for Morrisons.

“We don’t ever comment on matters related to mergers and acquisition,” said Potts.

Morrisons said a special dividend of 4p per share deferred from H2 2019/20 was declared in December 2020 and paid in January 2021.

Final ordinary dividend is 5.11p, taking the full-year ordinary dividend up 5.6% to 7.15p and full-year total dividend up 27.1% to 11.15p.

In its outlook, Morrisons said: “For 2021/22, with the anniversary of the first lockdown imminent and still some uncertainty as to how COVID-19 restrictions will evolve in future, there are many variables within our scenario sales and profit planning, especially so early in the new financial year.

“However, we recognise these are highly unusual times and want to provide whatever guidance we can for stakeholders for profit, debt and leverage.

We expect 2021/22 profit before tax and exceptionals including rates paid to be higher than the £431m profit achieved for 2020/21 excluding the £230m waived rates relief.

“This target assumes a gradual return to more normal trading conditions, no significant increases in expected direct COVID-19 costs such as elevated colleague absence, and no further restrictions such as another period of prolonged café closures.

“However, we enter 2021/22 with strong trading and operational gearing momentum, and further productivity and cost efficiency opportunities supported by our very robust underlying cash flow and balance sheet, all of which allows us flexibility around the choices we make for all stakeholders and gives us confidence in our profit guidance.”

CEO Potts added: “Morrisons key workers have played a vital role for all our stakeholders during the pandemic, especially the most vulnerable in British society, and their achievements over the last year have been remarkable.

“I am delighted that we are recognising their enormous contribution by becoming the first supermarket to pay a minimum of £10 an hour to all store colleagues.

“We are also today showing our continuing gratitude and appreciation for the incredible work of other key workers in the nation, by extending our 10% discount for NHS staff for the whole of 2021.

“I’m pleased with the greater recognition, warmth and affection for the Morrisons brand from all corners of the nation, following a year like no other. 

“We must now look forward with hope towards better times for all, and we’re confident we can take our strong momentum into the new year, targeting profit growth and significantly lower net debt during 2021/22.”