Philips needs solid numbers if he’s to see through his three-year plan - Bottom Line

Julian Harris
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Dalton Philips
So you've had a row with your other half, and the next day, with the ensuing awkwardness still lingering, your eyes drift towards the posh chocolates in Waitrose. Combine ’em with some flowers, you reckon – chuck in a faux-sentimental card and maybe even a two-day break in Bruges – and hey presto, problem solved.

This remarkably tempting solution is of course more attractive than Option B – namely talking through the underlying problem that your lovers’ tiff was based on in the first place. Why bother with all that when you can just paper over the cracks?

Such is human nature, and one must hope that similar foibles are not behind Morrisons’ new dividend, announced yesterday. The commitment to dish out 13.65p per share is, relatively, one of the most generous in the FTSE 100, and appears to be largely funded by one-off factors such as property sales.

Meanwhile, profits are tumbling faster than Ashley Young in a penalty area – down 51 per cent to £181m, on an underlying pre-tax basis.

Sales were even worse than the City’s already bearish expectations – down 7.4 per cent like-for-like, suffering especially during the last quarter. No wonder the firm’s market share is taking such a pounding, now at just 11 per cent according to Kantar.

With Tesco bringing in a new boss, Asda looking to invest hard, and Aldi/ Lidl aiming for the stars, Morrisons could soon slip into single figures.

Yesterday’s results weren’t all bad, admittedly. Earnings were an albeit modest beat, while the debt reduction and cost-cuts bode well.

But Morrisons needs far more if it is to survive in the ultra-competitive world of supermarket retail. Chief exec Dalton Philips is resolutely sticking to his positive spin, insisting that the three-year plan is on track despite it being “too early to see the benefits in the sales line.” If the incoming chairman sees this as a case of the emperor’s clothes, however, Philips will soon be out of a job.

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