Supermarket Adapts to Uncertain Times
- Morrisons reports a ‘volatile’ first quarter due to the pandemic
- Group like-for-like sales up 5.7% in Q1
- Retail contribution to like-for-like sales rose from -4.6% to 9.6% in weeks 12-14
- Morrisons expands online offering and home delivery options
- Strong balance sheet, low debt, and improved liquidity
Morrisons has revealed that trading in the first quarter of 2020 was ‘volatile’ due to the ongoing pandemic, despite seeing a ‘significant improvement’ in recent weeks. In the 14 weeks ended 10 May, group like-for-like sales, excluding fuel, were up 5.7%, with 5.1% from retail and 0.6% from wholesale trading. Group like-for-like sales including fuel were down 3.9%, with fuel like-for-like sales down 39.3%, and down almost 70% since lockdown due to less vehicle usage. The group said that sales had been on an ‘improving trend’ since the start of the year, and improved again before the impact of the virus to be flat for the first four weeks of 2020/21. Between weeks five to seven, there was ‘considerable stocking up and sales pull-forward’. As a result of weak Easter trading and the start of a nationwide lockdown, retail contribution to like-for-like sales was negative for weeks eight to 11. However, in weeks 12 to 14, this contribution rose to 9.6%. This follows Morrisons’ ‘gradual return’ to normal trading hours, the introduction of more protective screens and safety measures and improved availability. The group said it has also ‘significantly’ expanded its online offering and at pace, providing different home delivery options to vulnerable customers, and doubling the number of weekly home delivery slots for Morrisons.com. Morrisons said it also maintains a ‘very robust’ financial position, with a strong balance sheet, low debt and a ‘strong debt maturity profile’. It has made efforts to improve its liquidity by extending a £100m revolving credit facility from July, and putting in place three new £100m RCFs, taking its total RCF facilities from £1.45bn to £1.75bn. In the first quarter, £70m has been drawn on its RCF, and while it expects this to increase during the second quarter, scenario planning suggests it will ‘sustain very significant liquidity headroom’. David Potts, CEO of Morrisons, said: ‘We are facing into the unprecedented current challenges and are playing our full part to help feed the nation: working with determination, creativity and pace to serve customers as well as we possibly can. ‘The professionalism, enthusiasm and resourcefulness of our frontline key worker colleagues is extraordinary and is showing Morrisons at its very best.’
Factuality Level: 10
Factuality Justification: The article provides accurate information about Morrisons’ trading performance during the pandemic, including specific sales figures and details on how the company has adapted to the situation by expanding its online offering and improving safety measures. It also mentions the CEO’s statement about the company’s efforts to serve customers during these challenging times.
Noise Level: 3
Noise Justification: The article provides relevant information about the impact of the pandemic on Morrisons’ trading performance and their response to it, including changes in sales trends and efforts to improve online offerings and liquidity. It also includes a statement from the CEO acknowledging the challenges and praising employees. However, it does not contain any exaggerated or irrelevant information, nor does it dive into unrelated topics.
Financial Relevance: Yes
Financial Markets Impacted: Morrisons’ stock price and the supermarket industry
Financial Rating Justification: The article discusses Morrisons’ financial performance during the pandemic, including changes in sales and efforts to improve its liquidity. This impacts the company’s financial situation and can potentially affect the stock price and the overall supermarket industry.
Presence Of Extreme Event: No
Nature Of Extreme Event: Other
Impact Rating Of The Extreme Event: Minor
Extreme Rating Justification: The article discusses the impact of the COVID-19 pandemic on Morrisons’ trading, but it is not an extreme event as it is a known and ongoing situation rather than a sudden occurrence. The impact is rated as Minor due to the company adapting and maintaining its financial position.
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