Wm Morrison Supermarkets PLC (LSE:MRW) said it expects industry-wide retail price inflation during the second half, driven by commodity price increases, freight inflation and a shortage of HGV drivers.
The grocer may also have to spend extra cash to ensure products are available on the shelves, though it will try to mitigate these potential cost increases.
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In the second half of the year, profit before tax and exceptionals is forecast to be “considerably higher” than in the first six months, thanks to the recovery of fuel, café, and food-to-go segments.
Morrisons is also budgeting for “minimal further direct COVID-19 costs”, better profits in online and wholesale, and lower marketing costs from the My Morrisons loyalty scheme and stakeholder discounts.
The next financial year will see no direct Coronavirus (COVID-19) costs and the full recovery of lost profit.
In the six months to 1 August, like-for-like sales excluding fuel were up 8.4%, with online climbing 48% and wholesale rising 18.1%. Total revenue including fuel advanced 3.7% to £9.05bn.
Profit before tax and exceptionals dropped 37.1% to £105mln due to £41mln of COVID-19 direct costs, and £80mln lost profit in cafés, fuel and food-to-go.
Net debt at period-end was £3bn. The firm didn’t declare an interim dividend because of the takeover offers received from CD&R and Fortress.