FTSE 100 down following Morrisons closures

<p>The supermarket has announced it will be closing 11 stores, and selling 140 convenience shops.</p>

On Thursday (September 10th), the FTSE 100 index closed down 1.18 per cent or 73.2 points at 6,155.81. One major factor in this drop was the announcement from supermarket Morrisons that it would be closing stores amid falling sales and profits.

Morrisons shares fell 2.8 per cent to 170.9p following the news it would be shutting 11 stores and putting up to 900 jobs at risk. The big-four supermarket also reported a 47 per cent drop in half-year pre-tax profit to £126 million.

Commenting on the closures, chief executive David Potts said he regretted that it was necessary.

"This is a difficult decision but one which we cannot see any way through to make those stores viable," he explained.

It has not yet been disclosed which locations will be closed, as staff have not been informed, but Mr Potts said it would mainly be smaller supermarkets.

The move to sell the shops is part of the company's £1 billion cost-saving programme. Morrisons says it will now concentrate on its core supermarket business. On Wednesday, the retailer also announced that it would be selling 140 M convenience stores. These loss-making shops are expected to sell for around £25 million. The shops will be rebranded as "My Local" and the 2,300 staff will be kept on. An additional ten shops that are currently closed will also be re-opened.

Phil Dorrell, partner at Retail Remedy consultants told the BBC that the move to sell the convenience stores was a good decision.

"Now that the leaky bucket that was M local stores has ben sold, we should expect that Morrisons' profit future will look healthier," he said.

FTSE 100

While Morrisons has seen shares fall, other retailers have seen gains.

On Thursday, Next shares rose by 1.3 per cent after the company reported a 7.1 per cent rise in first-half profit to £347 million.

Dixons Carphone also went up – 1.8 per cent – following better-than-expected sales in the first quarter and like-for-like sales in the UK up ten per cent in the 13 weeks to August.

Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.