Morrisons reports improved sales and increased profits and says Brexit has had no negative effect

Caitlin Morrison
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Morrisons has seen a jump in sales, after slashing prices in the ongoing supermarket price war (Source: Getty)

Shares in Morrisons jumped almost five per cent as the market opened, after the supermarket reported an increase in sales during the 26 weeks to 31 July, and said it hasn't seen any ill effects from the Brexit vote.

The figures

Revenue dipped to £8.03bn from £8.06bn this time last year, however like-for-like sales in the first half, excluding fuel sales and VAT, were up 1.4 per cent. This came on the back of a 3.7 per cent hike in like-for-like transactions during the period.

Gross profit was down to £305m from £311m, while operating profit jumped to £224m from £172m, and pre-tax profit rose to £143m from £126m.

Underlying earnings per share went up 35 per cent to 5.04p.

Morrisons has proposed an interim dividend of 1.58p per share, up 5.3 per cent from 1.50p last year.

Shares were up 7.28 per cent in mid-morning trading.

Why it's interesting

Morrisons is in the middle of a turnaround and has been ramping up its battle against competitors in the ongoing supermarket price war in recent months.

The group has also increased ties with Amazon, giving it the upper hand in its relationship with online grocery service Ocado.

What Morrisons said

The firm is feeling confident about the future, despite the uncertainty brought on by the recent Brexit vote.

"It is too early to know how the recent referendum result could affect the British economy, but customers tell us their food shopping has not changed," the group stated today.

"We have seen no negative impact on customer sentiment or customer behaviour. There are some uncertainties, especially around the impact on imported food prices if sterling stays at its current lower level. However, our priorities are unchanged, and we will continue to invest in becoming more competitive and improving the shopping trip for customers."

Chief executive David Potts said: "We are pleased with positive like-for-like sales and 11 per cent underlying profit growth in the first half. Our priorities are unchanged. We have made improvements to the shopping trip for customers and we plan to do more.

"I would like to thank the entire Morrisons team of food makers and shopkeepers who are working very hard to fix, rebuild and grow Morrisons. This turnaround opportunity is in our own hands and I am confident we will succeed."

Potts' confidence would appear to be well-founded - although the group was demoted from the FTSE 100 at the end of last year, it stormed back in just three months later.

In short

Morrisons is reaping the rewards of slashing prices for customers - the turnaround is progressing well.

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