Private equity-owned grocer Morrisons reported a slump in profits as it warned the cost of living squeeze had left shoppers ‘very subdued.’
The group, which was recently leapfrogged by German discounter Aldi as the UK’s fourth-biggest supermarket, posted earnings of £177million for the three months to July 31, around half of the £356million delivered a year ago, as sales excluding fuel slipped 3.1 per cent.
Morrisons blamed the slide on ‘temporary and transitional factors’ as well as ‘unprecedented inflationary pressures’, which hit its food manufacturing operation.
Slow trade: Morrisons reported a slump in profits as it posted earnings of £177m for the three months to July 31, around half of the £356m delivered a year ago
Boss David Potts said it was ‘clear’ the cost of living was starting to change habits as shoppers choose cheaper brands and bargains.
‘The speed, scale and severity of cost and energy price increases, exacerbated by the terrible war in Ukraine, had significant impacts,’ Potts said.
He said it was doing everything it could to keep prices down as Britain’s biggest supermarkets engage in a cut-throat fight for customers.
The profit slump is another setback for Morrisons, which on Tuesday saw its chief operating officer and long-serving executive Trevor Strain quit.
He had previously held the post of finance chief and was tipped to be the next boss, and his exit came three months after commercial director Andy Atkinson announced plans to leave.
Earlier this year, finance chief Michael Gleeson headed off to rival Asda. The boardroom exodus followed the sale of Morrisons to US private equity house Clayton, Dubilier & Rice (CD&R) in a £7billion deal last October.
But CD&R’s swoop on the Bradford-based chain –founded in 1899 as an egg and butter stall – has been followed by a difficult period, with the loss of its ‘Big Four’ status likely to spark questions around whether it was right to exit the stock market.
Morrisons sales fell by 4.1 per cent in the three months to September, according to figures from consultants Kantar, with its market share dropping to 9.1 per cent from 9.8 per cent, demoting it to fifth place in the UK supermarket league table.
The company has been under immense pressure from Aldi and its rival German discounter Lidl, both of whom have advanced heavily into Morrisons’ heartlands in the north of England.
Pressure also showed no signs of letting up after Aldi this week pledged to do ‘whatever it takes’ to keep its prices the lowest in Britain.
Aldi has attracted new customers over the past 12 weeks as shoppers look to make their money go further.
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