Shares in supermarket chain Morrisons tumbled today (March 12th) after the company announced a huge drop in pre-tax profits for the past year.
Morrisons' share price fell almost 11 points in opening trading before rebounding slightly to 204.60 as investors came to terms with the hugely disappointing figures. The supermarket revealed pre-tax profits to be down 52 per cent to £345 million for the past 12 months. It signifies the company's worst results in eight years and presents a formidable challenge for new chief executive David Potts.
Mr Potts will replace Dalton Phillips, who announced an end to his five-year tenure in January, on March 16th. Morrisons has a number of obstacles to overcome if it is to keep pace in the highly competitive supermarket sector. Discounters such as Aldi and Lidl have put considerable pressure on the traditional 'big four' with Morrisons, Tesco, Asda and Sainsbury's all feeling the heat.
Despite the poor results, Andrew Higginson, Morrisons' chairman, was positive about the future: "Last year’s trading environment was tough, and we don’t expect any change this year.
"However, Morrisons is a strong, distinctive business – we own most of our supermarkets, have strong cash flow, and are famous with customers for great quality fresh food at low prices. This gives us a good platform."
One of the key reasons for Morrisons falling behind its rivals has been its slow uptake in new areas of commerce such as online grocery shopping and convenience stores. The company had planned to open more M stores in the coming year, but the results have meant this process will have to be "slowed significantly".
In addition, it stated that it would be closing 23 M local stores over the next 12 months which will result in the loss of 380 jobs.