Britain’s fourth largest supermarket has been trimming its prices and revamping its stores over the past year or so in a bid to keep up with its peers and fend off competition from German discounters Aldi and Lidl.
It said in a statement that focus on “improving the customer shopping trip” helped like-for-like sales (excluding fuel) grow by 3% (H1 16/17: 1.4%). Total sales jumped 4.8% year-on-year to £8.42bn (H1 16/17: £8.03bn).
Underlying profit before tax growth - Morrisons' preferred metric - was a little better than analysts had expected, rising 12.7% to £177mln (H1 16/17: £157mln).
'Another good performance'
“A new Morrisons is beginning to take shape,” said chief executive David Potts.
“The capability of the team continues to improve and we are making strong headway with our plans to Fix, Rebuild and Grow.
“Our supermarkets continue their focus on improving the customer shopping trip and, in wholesale supply, we are beginning to realise some of the opportunities that our unique team of food makers and shopkeepers bring us.”
Chairman Andrew Higginson added: “This is another good performance from Morrisons. Our seventh consecutive quarter of positive like for like means that we are able to report profit growth on growth for the first time in the turnaround.”
Confident outlook despite UK consumer concerns
Morrisons said the “good trading momentum” has rolled over into the second half, although it did note that the UK consumer “faces many uncertainties” and the competitive food retail environment.
The supermarket has been working to boost profits outside of its stores and it generated a further £14mln incremental profit from wholesale, services, interest and online in the first half.
It now expects £75m-£125mln of incremental pre-tax profit from these four areas in the medium term, increased from £50m-£100mln previously.
That target includes the contribution from its new wholesale supply agreement with McColl’s which is expected to start adding to the bottom line during the next financial year (2018/19).
Speaking of that tie-up, Morrisons confirmed that it expects wholesale sales to exceed £700mln next year, rising to more than £1bn “in due course”.
--Updates for additional info and CEO comment--