This article is from the source 'independent' and was first published or seen
on .
It last changed over 40 days ago and won't be checked again for changes.
Morrisons profit plunge puts boss Dalton Philips under pressure
Morrisons chief feels the pressure as profits slide amid grocers’ price war
(about 11 hours later)
Morrisons boss Dalton Philips today defended his price-slashing strategy to pull in customers from rival stores, despite the beleaguered grocer’s first-half profits more than halving.
Morrisons’ chief executive, Dalton Philips, has defended his attempts to wrestle shoppers from the clutches of its rivals by slashing prices, even though the grocer’s first-half profits more than halved.
The Irishman admitted he was “under pressure” amid a price war triggered by German discounters Aldi and Lidl and intensified by supermarket heavyweights Tesco and Asda.
Mr Philips admitted yesterday that he was “under pressure” amid a price war triggered by the German discounters Aldi and Lidl and ratcheted up by the supermarket heavyweights Tesco and Asda.
First-half pre-tax profits slumped by 51 per cent to £181 million, Morrisons announced, its lowest level since 2006 at the height of the grocer’s disastrous integration of Safeway.
First-half pre-tax profits slumped by 51 per cent to £181m, Morrisons announced – the lowest level since 2006 at the height of its disastrous integration of Safeway.
Sales at shops open longer than a year plunged 7.4 per cent over the six months and 7.6 per cent in the second quarter as the price war stepped up.
Sales at supermarkets open longer than a year plunged by 7.4 per cent over the six months and 7.6 per cent in the second quarter as the price war heated up.
The role of Philips, pictured, is under increasing scrutiny, not least by bookmakers who are taking bets on whether he will be fired. “As a chief executive you always feel under pressure to execute a big plan,” he said. “You feel it acutely but I’m confident in this plan.”
Mr Philips’ role is under increasing scrutiny, not least from bookmakers who are taking bets on whether he will be fired.
The Irishman admitted he was “under pressure” amid a price war triggered by German discounters Aldi and Lidl and intensified by supermarket heavyweights Tesco and Asda.
“As a chief executive you always feel under pressure to execute a big plan,” he said. “You feel it acutely, but I’m confident in this plan.”
First-half pre-tax profits slumped by 51 per cent to £181 million, Morrisons announced, its lowest level since 2006 at the height of the grocer’s disastrous integration of Safeway.
He hopes to turn round the grocer’s fortunes by spending £1bn over three years on slashing prices, investing in shops, opening convenience stores and delivering online grocery orders – via partner Ocado – to more homes.
Sales at shops open longer than a year plunged 7.4 per cent over the six months and 7.6 per cent in the second quarter as the price war stepped up.
Morrisons invested £135m in cutting prices in the first half to fight Aldi and Lidl at their own game. It also said customers would be charmed back to its shops through extras including fresh-food counters, cafés and fuel.
The role of Philips, pictured, is under increasing scrutiny, not least by bookmakers who are taking bets on whether he will be fired. “As a chief executive you always feel under pressure to execute a big plan,” he said. “You feel it acutely but I’m confident in this plan.”
Clive Black, an analyst at the broker Shore Capital, said he was encouraged by positive recent market data for Morrisons, but warned that it was aided by investment in promotions and that the strategy of Dave Lewis, the new Tesco chief, will also have an impact. Mr Black said: “We would be very surprised if a stronger and simplified value proposition was not at the centre of any plan to rejuvenate [Tesco’s] core chain – a change in approach that must result in waves of discomfort for the rest of the sector.”
He hopes to turn around the grocer’s fortunes by investing £1 billion over three years in slashing prices, investing in shops, opening convenience stores and delivering online grocery orders — via partner Ocado — to more homes.
Shares in Morrisons, which have declined by more than 40 per cent over the past year, rose by 1.20p to 177.80p after the retailer said it remained committed to a 5 per cent dividend increase to 4.03p. In contrast, Tesco slashed its half-year dividend by 75 per cent two weeks ago.
Morrisons invested £135 million in prices in the first half to fight Aldi and Lidl at their own game, and said customers would be charmed back to its shops by extras including fresh-food counters, cafés and fuel.
Shore Capital analyst Clive Black said he was encouraged by positive recent market data for Morrisons, but warned it was aided by investment in promotions and that new Tesco chief Dave Lewis’s strategy will doubtless have an effect.
Black said: “We would be very surprised if a stronger and simplified value proposition was not at the centre of any plan to rejuvenate [Tesco’s] core chain; a change in approach that must result in waves of discomfort for the rest of the sector.”
Shares in Morrisons — which have plunged more than 40 per cent over the past year — today edged up 0.7p to 177.3p after the retailer remained committed to a 5 per cent dividend rise to 4.03p. Tesco slashed its half-year dividend by 75 per cent two weeks ago.
Begbies Traynor partner Julie Palmer said: “The likes of Tesco have decided to slash dividends to provide more ammunition in the fight against discounters.
“Morrisons is playing a more risky game of increasing the dividend to shore up shareholder support and selling the family silver instead: its property portfolio. This time round, Morrisons’ gamble has failed to pay off.”
