Wm Morrison posts first-ever loss, predicts loss for fiscal year too |
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Fri, 21 Oct 2005 06:05
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LONDON: Britain's fourth largest food retailer William Morrison Supermarkets Plc. said it may post its first-ever annual loss for the current financial year. The company, which acquired Safeway Group last year and faced several problems in integrating these stores, said cost of store conversions and depot closures will cause losses at the pretax level.
The Bradford, Northern England-based super market chain reported its first-ever loss in its 106-year history of 59.6 million pounds (net) in the first half, compared with net income of 65.1 million pounds a year earlier.
It said it estimates its annual pretax profit to drop as much as 84 per cent to 50 million pounds.
At the core Morrison stores -- stores left of the original pre-merger Morrison group -- third-quarter like-for-like sales fell 5.2 per cent, excluding fuel, compared with 2.7 per cent fall in the first-half. Same-store trading at the converted Safeway stores rose 11 per cent in the quarter and the group like-for-like sales rose by 1.7 percent, or by 5.4 percent if fuel sales -- where prices increased dramatically during the period -- are taken into account.
The company said the process of converting Safeway stores to the Morrison format would be complete by the end of the year.
The company's chairman Ken Morrison, who celebrated h9is 74th birthday Thursday, said he would carry on in his role for the foreseeable future. The company is on the look out for a successor to chief executive Bob Stott.
The company has not been able to capitalise on the Safeway acquisition initiated with an intention to compete nationally with Tesco Plc and Wal-Mart Stores Inc.'s Asda. It is spending 50 per cent more than planned to change each Safeway to its own format and is losing customers as rivals offer discounts. It had revised profit forecasts five times since the buy-out.
It is planning to shut three distribution centers to help save money and eliminate duplicate operating costs linked to the Safeway purchase. It is estimated that 2,500 of the 8,000 workers at these depots may lose their jobs.
The company has a 11.3 per cent share in the U.K. grocery market, according to market research company Taylor Nelson Sofres Plc.
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