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Profits tumble at Morrisons following store disposals

PUBLISHED: 17:03 10 March 2016 | UPDATED: 17:03 10 March 2016

Morrisons boss David Potts. 
Photo: Morrisons/PA Wire

Morrisons boss David Potts. Photo: Morrisons/PA Wire

Supermarket Morrisons has posted a sharp fall in full-year profits following a round of store closures as it bids to turn around its fortunes.

Morrisons said yesterday that underlying pre-tax profits fell to £242million in the year to January 31, from £345m a year ago after closing a number of unprofitable supermarkets and selling off convenience store outlets.

But it reported an improvement in like-for-like sales, with a decline of 2% compared with a fall of 5.9% for the previous 12 months.

It comes after the group surprised the market over Christmas by reporting a 0.2% rise in like-for-like sales excluding fuel in the nine weeks to January 3.

It was one of the few major supermarket chains to report a sales rise in the key festive trading period, with the industry gripped in a fierce price war with discounters Aldi and Lidl.

Morrisons’ statutory bottom line pre-tax profit came in at £217m, compared with a £792m loss a year ago when its figures include large writedowns on the value of its store estate. The profits were in line with City forecasts.

Chief executive David Potts, who took over from the ousted Dalton Phillips almost a year ago, made a number of changes during the period to improve profitability.

These included the closure of 21 unprofitable supermarkets and the sale last September of 140 M local convenience stores for £25million to turnaround specialist Greybull Capital. The firm also axed around 700 jobs at its head office as it cut back on costs.

The moves saw the chain this month selected to re-enter the prestigious FTSE 100 index of the country’s biggest firms, after being forced out three months earlier.

Mr Potts said yesterday he wanted to “fix, rebuild and grow Morrisons”.

He added: “By improving the shopping trip for customers, we have started the journey to turn around the business and make our supermarkets strong.”

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