Belfast Telegraph

Morrisons to reveal profits boost after retailer 'finds its mojo'

Morrisons will update the market on its annual results this week as it continues to reap the rewards of investment into cutting prices and overhauling stores.

The grocery giant is expected to reveal a 54% rise in pre-tax profits to £335 million, up from £217 million in 2016.

Analysts at Jefferies are pencilling in like-for-like sales growth of 1.8%.

Jefferies' James Grzinic said: "M uch has been achieved in the past two years through reinvestments into store hours, improved assortment, sharpened value and a catch-up refurb programme (with around a third of stores done in the past 18 months)."

An annual sales and profits boost would solidify the grocer's bright start to 2017 when it hailed its strongest festive sales growth for seven years after consumers tucked into its revamped premium range.

Chief executive David Potts, who was parachuted in to firm up sales two years ago, said the group had "found its mojo" after a sparkling festive performance saw it post a 2.9% hike in like-for-like sales excluding fuel for the nine weeks to January 1.

The Bradford-based firm also emerged as the fastest-growing retailer within the Big Four, increasing its market share for the first time since June 2015 in the 12 weeks to January 29, according to Kantar Retail.

Mr Potts has secured a deal to sell groceries through Amazon, ploughed investment into price cuts and called time on under-performing stores in his attempts to turn the page on the supermarket's ill-fated era under ousted boss Dalton Philips.

His efforts come as the grocery sector's leading players remain gripped by a fierce price war with discounters Aldi and Lidl and face further challenges from an expected slowdown in consumer spending.

Food prices are beginning to rise on the supermarket shelves as producers begin to pass down soaring import costs triggered by the Brexit-hit pound.

Average prices at food stores have seen their largest increase since April 2013, rising 0.5% in January, the Office for National Statistics said.

It helped trigger an unexpected fall in retail sales by 0.3% over the period, suggesting household spending was being squeezed by higher inflation.

Morrisons also faces questions over its position within the grocery market after rival Tesco made a shock swoop for food wholesaler Booker.

The £3.7 billion deal for Booker, the country's largest wholesaler and owner of Londis and Budgens convenience stores, is expected to radically alter the supermarket landscape.

Shares in Morrisons have risen by 5% on the London Stock Exchange since the start of 2017.