WM Morrison has reported full year losses of almost £800 million, its worst in eight years, after writing down nearly £1.3 billion in the value of its supermarkets.
In an attempt to arrest its decline, the supermarket announced it would close 23 M Locals, its town centre convenience stores and continue with its three-year £1 billion cost-cutting, which it said was well on-track.
Morrisons, Britain’s fourth largest supermarket, posted a £792 million pre-tax loss in the twelve months to February 1.
The loss included the company writing down the value of its stores by £1.27 billion. Even after stripping out that impairment, underlying pre-tax profit halved from £719 million to £345 million - a drop of 52 per cent.
Analysts had expected a cut in the dividend but Morrisons said it was increasing its final dividend by 5 per cent from 13p to 13.65p this year. However, it has signalled lower payouts going forward, guiding to a dividend of “not less than 5p per share” for 2015-16.
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The surpermarket is also being hit with falling sales, with like-for-like sales down 5.9 per cent, compared to a 2.8 per cent decline the previous year. There was also a 4.9 per cent decline in turnover to £16.8 billion.
Mr Higginson, Morrisons chairman who took over in January, said the company would go back to “being more like the Morrisons our customers expect”.
“Last year’s trading environment was tough, and we don’t expect any change this year,” he said.
“However, Morrisons is a strong, distinctive business - we own most of our supermarkets, have strong cash flow, and are famous with customers for great quality fresh food at low prices. This gives us a good platform.”
At the top of Mr Higginson’s to-do list was to remove the chief executive Dalton Philips, who left in January. He will be replaced by David Potts, to complete a one-two of former Tesco executives leading the beleaguered chain.
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Mr Higginson, has previously said it will take three to five years to turn the Bradford-based grocer around as it comes under pressure from the rise of the discounters Aldi and Lidl, as well as a resurgent Tesco.
Mr Potts will start his new role at the head of the retailer on Monday, taking charge of a business that employs some 127,000 people and has 605 stores.
Analysts said the results were in line with expectations and pointed out the cost cutting programme remained well on track.
James Grzinic, of Jefferies, said: “Morrisons remains our favoured UK grocer given clearly improving trading momentum and pricing position, a more attractive valuation and a superior balance sheet.
“In addition, we expect the group to leverage off its clear USP (a vertically integrated approach to sourcing fresh products) more effectively in future. This may well be a major area of focus for the new leadership.”