Supermarket sees EBITDA fall as it grapples with extroardinary trading conditions
Morrisons has reported increased sales but reduced profitability as it warned of a “very subdued” consumer market.
Announcing Q3 trading for the 13 weeks ending 31 July 2022, Morrisons said that record inflation, rising interest rates and energy prices at unprecedented levels made for a tough marketplace for both retailers and consumers.
Group revenue for the quarter was up 4.5% from £4.58bn last year to £4.79bn, but group like-for-like sales, excluding fuel, were down 3.1% on last year. On a three-year basis, Q3 group like-for-like sales figures excluding fuel were, however, up 4.8%.
Adjusted EBITDA - a measure of core profitability - was £177m, down from £356m last year. Morrisons said this reflected a number of temporary and transitional factors, some of which are expected to reverse in Q4, as well as its year-end change.
“During the period we also experienced unprecedented inflationary pressures in our own food manufacturing operations,” the retailer revealed. “As a foodmaker we feel the effects of inflation earlier than other retailers, but conversely are able to recover more quickly when inflation falls. The business exited the quarter in a stronger position, with good momentum, and we anticipate this continuing into Q4.”
Changing shopping patterns
David Potts, Morrisons’ chief executive, said: “It’s clear that the cost-of-living crisis is starting to change customer shopping patterns in many ways. The speed, scale and severity of cost and energy price increases, exacerbated by the terrible war in Ukraine, had significant impacts through the quarter, but the market is still growing and the energy price guarantee will ease pressure on consumers.
“We are doing everything we can to keep prices down for customers. Last quarter we introduced one of our biggest-ever price cut campaigns and in Q3 we introduced our popular Summer Collector scheme. Earlier this week we announced another significant price cut programme across 150 of our most popular products and tomorrow we are launching a timely fuel promotion.
“Importantly, we are adjusting and adapting, with ongoing investment in our customer proposition including exciting plans for McColl’s which we’re confident will continue to grow our convenience offering and footprint. We are also improving our digital capabilities and investing strongly in our My Morrisons card and app, helping us to incentivise and reward our customers in a more personalised and targeted way.”