Morrisons Supermarkets, UK’s fourth largest grocer, reports interim results today.
Against the backdrop of ‘weak’ consumer confidence, Morrisons’ second quarter group like-for-like sales was down 1.9%, compared to 6.3% up in 2018. Total revenue was up marginally 0.4% to £8.82 billion.
“Sales comparatives were strong,” said CEO David Potts on its interim results, “with 2018/19 assisted by very favourable summer weather and events such as the World Cup and royal wedding. In contrast, this year’s summer weather was largely unfavourable and there were no similar events to boost sales.”
The question now is whether most of the negative sentiment has been priced in by the market. Over the past year, we saw Morrisons (MRW) share price decimated by Brexit, weak consumer confidence, and unfavourable sector sentiment. Morrison’s 12-month share performance is significantly weaker than the general market.
However, today’s solid interim results may help to ease some of the market concerns. Brexit undoubtedly remains the elephant in the room so to speak, but the fact that Morrisons is continuing to produce significant free cash flow and dividends, with a special interim dividend of 2.00p, may stabilise its share price going forward.
Meanwhile, Morrisons’ tie-up with Amazon may yield better-than-expected results, as Amazon Prime Now expands aggressively across many UK cities.
Morrisons’ share price opens up 6p to 200p.
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Jackson has over 10 years experience as a financial analyst. Previously a director of Stockcube Research as head of Investors Intelligence providing market timing advice and research to some of the world largest institutions and hedge funds.
Expertise: Global macroeconomic investment strategy, statistical backtesting, asset allocation, and cross-asset research.
Jackson has a PhD in Finance from Durham University.