Thursday 12 September 2019 7:45 am

Morrisons extends Amazon partnership as it delivers flat half-year sales

Morrisons has posted flat sales in the first half as it unveiled a new multi-year partnership with Amazon Prime amid challenging conditions in the grocery sector

Read more: Morrisons to expand Amazon online delivery service across the UK

The figures

Morrisons like-for-like sales excluding fuel and VAT ticked up 0.2 per cent in the six months to 4 August.

Group revenue rose 0.4 per cent to £8.8bn.

Profit before tax and exceptionals increased 5.3 per cent to £198m.

Net debt narrowed from £2.39bn to £2.36bn.

Morrisons issued a special dividend of 2p, taking total interim dividend up 2.1 per cent to 3.9p.

Why it’s interesting

Economic uncertainty and waning consumer confidence has taken its toll on Morrisons, which has suffered a 14 per cent decline its share price over the last six months.

While like-for-like sales were broadly flat for the half-year, they dropped 1.9 per cent in the second quarter, marking Morrisons first quarterly fall in sales since 2016.

However, Morrisons welcomed its robust – if unspectacular – performance as it looks to reinvigorate sales amid tough trading conditions, and shares in the supermarket chain rose more than three per cent.

Morrisons had to contend with strong comparatives last year, when the World Cup and royal wedding provided a fillip to sales.

In contrast, the grocery sector was lumped with largely unfavourable weather this summer, and was impacted by weak consumer confidence as Brexit uncertainty rumbles on.

The chain is also facing increased competition from German discount giants Lidl and Aldi, which have been growing their market share.

Morrisons today announced it has beefed up its wholesale supply initiative, extending its tie-up with Amazon to offer groceries through the ecommerce giant’s Prime Now service.

“A special dividend confirmed in interim results from Morrisons today will ease investor concerns about a tough summer for the supermarket,” said Ed Monk, associate director at Fidelity Personal Investing.

“Further news of success from its tie-up with Amazon and rebadging of McColl stores indicate that Morrisons is searching hard for areas it can grow into.”

The company said it expected like-for-like sales to improve in the second half and planned to cut additional costs.

Read more: Morrisons fails to convince despite Ocado deal

What Morrisons said

“We stayed focussed on our fix, rebuild and grow strategy, and were pleased to maintain the momentum of the turnaround against strong comparatives last year,” said chief executive David Potts.

“Sales and profit progress was robust, and we again invested in improving our competitiveness for customers. 

“News today of new wholesale initiatives, including a further extension of our partnership with Amazon, and of another special dividend, again show how new Morrisons continues to become broader and stronger for all stakeholders, and how progress can be meaningful and sustainable even in more testing trading conditions.”

Main image credit: Getty