Morrisons (LSE: MRW) Holiday Trading Update: Wholesale Drives Growth; Retail Sales Impacted by Uncertainty

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Key Points

  • UK grocery retailer Morrisons reported comparable sales growth (excluding fuel) of 3.6% in the nine weeks ended January 6, below the consensus estimate and slowing sequentially.
  • Management pointed to consumer uncertainty as a factor inhibiting growth in the period.
  • Wholesale revenues drove growth, contributing 3.0% to total comps, while retail comps, excluding fuel, contributed just 0.6%.
  • The company maintained the guidance given in its first-half results.

£700 million of annualized wholesale supply sales expected ahead of initial end-2018 guidance.
£1billion of annualized wholesale sales expected “in due course.”
Further £4 million of incremental profit from wholesale, services, interest and online.
In the second half, management expects lower costs of both Morrisons.com expansion and accelerated wholesale supply.
Net debt will remain at a low level, consistent with the company’s capital discipline and the principles of capital allocation.

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