Morrisons’ share price stays flat despite 37% fall in profit

father playing with his daughter pushing the shopping cart

The Morrisons (LSE: MRW) share price barely moved this morning, despite the company revealing a big fall in profit in its interim numbers. 

Falling profit

Total revenue (including fuel) for the six months to 1 August rose 3.7% to just over £9bn. But like-for-like sales (excluding fuel and VAT) were down 0.3%. This was in sharp contrast to the 8.7% increase reported in the same period last year.

Online like-for-like sales jumped 48% and are now up over 237.1% compared to two years ago, helped by the company’s relationship with Amazon. A total of 328 stores are also now working with Deliveroo to provide grocery home delivery. 

However, profit before tax and exceptionals tumbled 37.1% to £105m. This was due to £41m of pandemic-related costs and £80m in lost profit in sales from cafes, fuel and food-to-go. On a statutory basis, pre-tax profit fell 43.4% to £82m.

Looking ahead 

Morrisons made no change to its guidance. The UK supermarket expects profit before tax and exceptional items to be above the £431m recorded for 2020/21. However, this is dependent on a reduction in Covid-19 costs, lower lost profit and the company’s ability to manage cost increases relating to its supply chain.

Further ahead, the company expects “material benefits” in 2022/23 as a result of Covid-19 costs not being repeated and the “full recovery of lost profit”.

No dividend

Morrisons also confirmed it would be recommending Clayton, Dubilier & Rice’s offer of 285p per share to shareholders. The latter will be required to approve this offer at the company’s General Meeting in mid-October. This is likely to be the reason for the static share price today.

As a result of the expected takeover, the £7bn cap confirmed that it would not be paying an interim dividend to shareholders. 

The post Morrisons’ share price stays flat despite 37% fall in profit appeared first on The Motley Fool UK.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK owns shares of and has recommended Amazon. Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has recommended Morrisons and has recommended the following options: long January 2022 $1,920 calls on Amazon and short January 2022 $1,940 calls on Amazon. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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