Property to join milk on sale at grocer Morrison
SUPERMARKET chain William Morrison is this week set to sweeten its drop in profits with a property sell-off that could raise £500m for investors.
The grocery giant, which has already said its Christmas sales were disappointing, is forecast to report annual pre-tax profits of between £734m and £805m, down from £879m in 2013 and the second successive year of decline.
Margins are also expected to come under pressure in Thursday’s results, with analysts at Panmure Gordon predicting a 0.5 percentage point fall to 4.8 per cent, excluding the money spent expanding online.
The firm is nevertheless expected to announce new bargains for shoppers as part of a brewing price war among the biggest grocers, which last week produced a rapid succession of price cuts on milk.
Morrisons, Britain’s fourth-largest supermarket, lost further ground to discount chains Lidl and Aldi during the festive rush, taking its market share down to 11.5 per cent, according to research by Kantar.
Dalton Philips’ outfit is ready to change its stance on property sales, following calls from activist investors including Elliott Associates to rid itself of some of its freehold estate.
The supermarket owns the freehold to around 90 per cent of its shops, which is much higher than the rest of the industry. Founder Ken Morrison, who stepped down from the group in 2008, considered property ownership as the firm’s backstop and refused to consider selling.
Despite rumours of takeover interest from private equity firms, Morrisons’ shares have fallen by more than a fifth since September, when the supermarket said it was reviewing its £9bn property portfolio with a view to managing its real estate “more actively”.
Analysts said the proceeds of a property sale could be used to shore up a special dividend and help fund Morrison’s long-awaited push into online retail, which it launched at the start of the year in collaboration with web retailer Ocado.