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.
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.
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