M Local stores amid falling sales.
Chief executive Dalton Philips announced plans to limit growth to 350,000 sq ft – about half of the average rate of the last five years – and cut spending from £1.2bn this year to £650m by 2015-16.
“The future is no longer in building big supermarkets. The space race is well and truly over,” Philips said. The group has also launched a review of its vast £9bn property portfolio.
Pre-tax profits slumped by 22 per cent to £344m in the six months to
4 August, which Philips said was due to “deliberate choices” such as its £216m deal with Ocado. While still having a lot to do, Philips said the direction of travel was “encouraging,”
“We are growing with pace and conviction in new markets. But we will only succeed if we offer something different and better,” he said.
The results also showed Morrisons wrote-off £27m of costs related to work developing its own online business before striking a deal with Ocado.
Sales were flat at £8.9bn, although sales at stores open more than a year declined by 1.6 per cent.
Meanwhile its new online parter Ocado posted a 16 per cent jump in sales to £189.2m in the 12 weeks to
11 August. It completed 138,889 orders a week, 15 per cent ahead of the same quarter last year, with customers on average spending £1.10 more at £113.54.