Morrisons’ Q3 earnings halved despite £4.8bn revenue

Bradford-based supermarket giant Morrisons announced on Wednesday its third-quarter adjusted EBITDA fell to £177 million from £356 million last year “reflecting a number of temporary and transitional factors – some of which are expected to reverse in Q4 – and our year-end change.”

Morrisons said that for the 13 weeks ending July 31, 2022, group revenue was up 4.5% to £4.79 billion.

“With record inflation, rising interest rates and energy prices at unprecedented levels, consumer sentiment continues to be very subdued …” said Morrisons.

“During the period we also experienced unprecedented inflationary pressures in our own food manufacturing operations.

“As a foodmaker we feel the effects of inflation earlier than other retailers, but conversely are able to recover more quickly when inflation falls.

“The business exited the quarter in a stronger position, with good momentum, and we anticipate this continuing into Q4.”

US private equity firm Clayton, Dubilier & Rice recently completed its £7 billion takeover of Morrisons.

Morrisons said on Tuesday chief operating officer Trevor Strain is to leave the business.

Morrisons CEO David Potts said: “It’s clear that the cost of living crisis is starting to change customer shopping patterns in many ways.

“The speed, scale and severity of cost and energy price increases, exacerbated by the terrible war in Ukraine, had significant impacts through the quarter, but the market is still growing and the energy price guarantee will ease pressure on consumers.

“We are doing everything we can to keep prices down for customers.

“Last quarter we introduced one of our biggest ever price cut campaigns and in Q3 we introduced our popular Summer Collector scheme. Earlier this week we announced another significant price cut programme across 150 of our most popular products and tomorrow we are launching a timely fuel promotion – with 5p a litre off with a £40 spend in store – to help customers with the high cost of motoring.

“Importantly, we are adjusting and adapting, with ongoing investment in our customer proposition including exciting plans for McColl’s which we’re confident will continue to grow our convenience offering and footprint.

“We are also improving our digital capabilities and investing strongly in our My Morrisons card and app, helping us to incentivise and reward our customers in a more personalised and targeted way.”