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Wednesday 16 October 2019

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Mixed half-year results for leading UK retailers

Written by Peter Walker
13/09/19

Results statements for three of the UK’s biggest retailers have demonstrated mixed fortunes on the High Street and concerns about the impact of Brexit on UK shoppers.

Morrisons reported its first fall in quarterly underlying sales since 2016, with its interim report for the half-year period ending 4 August, down 1.9 per cent against tough comparisons of a 6.3 per cent increase for the same period last year.

However, on a statutory basis, half-year profit before tax rose 48.5 per cent year-on-year to £202 million, while total half-year revenue also increased, albeit by only 0.4 per cent year-on-year to £8.83 billion.

Half-year like-for-like sales were also just up 0.2 per cent, although this was a slowdown on the 4.9 per cent increase recorded this time last year.

The supermarket chain also used its half-year trading update to reveal it has deepened its relationship with Amazon, signing a long-term partnership “over a number of years” to explore “new opportunities”.

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

Meanwhile, the Co-operative posted underlying operating profits up by 50 per cent to £120 million, backed by the 22nd consecutive quarter of like-for-like growth in food.

Total sales increased by three per cent, while like-for-like sales increased by 1.7 per cent.

The food business attributed sales growth to its extended online food delivery trials in London using zero-emission electric cargo bikes, and from its partnership with Deliveroo.

“Our food business continued to perform well in a fiercely competitive market,” read a statement. “We will continue to innovate and invest further within our food business to maintain the competitive advantage within the convenience sector.”

The update also noted: “In the event of a ‘no deal’ Brexit there is an increased risk of some disruption to our supply chain, however we will do all we can to protect our customers and members from this impact.”

John Lewis Partnership reported its first-ever half-year loss yesterday, and warned that a no-deal Brexit could lead to “significant” impacts that it would not be able to offset.

For the six-month period ending 27 July, the parent company of Waitrose and the eponymous department store saw underlying pre-tax losses of £25.9 million, compared to profits of £800,000 during the same period last year.
Overall half-year revenue was also down 1.4 per cent year-on-year to £4.78 billion.

“Should the UK leave the EU without a deal, we expect the effect to be significant and it will not be possible to mitigate that impact,” said outgoing chairman Charlie Mayfield. “Brexit continues to weigh on consumer sentiment at a crucial time for the sector as we enter the peak trading period.”

Half-year losses were driven by widening operating losses at John Lewis, up £61.8 million from £19.3 million a year ago, due to falling sales - down 2.3 per cent - rising IT overhaul costs and increasing price inflation.

Waitrose performed better, with underlying earnings up 14.7 per cent to £110.1 million, though like-for-like sales slipped 0.4 per cent year-on-year.



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