Grocery Guru Ep 20: Morrisons' Preliminary Results

Join Andrew Grant and Darren A. Smith in the twentieth episode of Grocery Guru discussing Morrisons' Preliminary Results for the 52 weeks to 31st January 2021.

You Can Read the Full Morrisons' Preliminary Results Episode Transcript Below:

Darren A. Smith:

Welcome to episode 20 of our weekly chat with the Grocery Guru that is Andrew Grant. Andrew, how are you?

Andrew Grant:

Morning, Darren. Very good, thank you.

Darren A. Smith:

Good, good. Okay, so in this week's 10-minute chat with the Grocery Guru, we're going to talk about Morrisons' preliminary results, because they're the first after COVID, is that right?

Andrew Grant:

Yeah, the first major retailer to put out full-blown annual results post COVID, January 31st. Obviously, you've got Tesco and Sainsbury's following in the next few weeks.

Darren A. Smith:

Right, okay. The general people, good, bad? What did you think of the results?

Andrew Grant:

It's fascinating actually because the headlines I think in the press yesterday were the share price dropped significantly because I think the city suddenly realized the sheer cost of this pandemic to the supermarkets. On the face of it, they've done really well, and the chief exec was praising how well the business had done, and they have done a phenomenal job if you think about it, all the supermarkets feeding the country with a little issue of Brexit in the middle.

Andrew Grant:

Yeah, they're like-for-like sales, the standard industry measure of sales performance up 8.6%. That would be ... supermarkets would've given their right and left arms for that two years ago.

Morrison's Financial Summary gives a quick view of their ups and downs for 2020/21 year

 

Darren A. Smith:

In comparison, 8.6, but 2019 on the previous year was down .8%, so it's really a 9. 10. stretch. You're right, would've given their arms or legs.

Andrew Grant:

But then, their profit's down 50.7%. Was it 290 million spent on COVID costs, restructuring, PPE, additional staff, additional vans and online delivery, and then 230 million of business rates that they handed back to the government, so they carried on paying? What's that, 520 million they could've made if it hadn't been for COVID. They made 400 million last year, and it's cost them 500 million. It's cost them a years of profits to survive COVID.

Darren A. Smith:

That's a good takeaway, isn't it? A year's profits to survive COVID, because all of us look at industries like hospitality, and think they're wiped out, they're struggling, it's going to be hard to come back. The supermarkets are doing really, really well, but they're not.

Andrew Grant:

Think about it, it's this spike effect, isn't it? The supermarkets have had this big, 10% spike, plus a massive spike in costs, and they're driving, at the moment, headlong into that. I think I'd rather be a pub chain, where all of a sudden when I open up in May, I'll be 300% up on the year. The figures will look fantastic.

Darren A. Smith:

That's very true. I guess, maybe don't look as hard and as fast as people like you and I and account managers out there, but if they are, you're right, they're going to be up hugely. I noticed other things like 300 McColl's stores to be converted to Morrisons Daily over the next three years. A new contract with McColl's signed to extend the partnership to 2027, so there's some good news in there.

Andrew Grant:

Yeah, becoming big in convenience, absolutely. One thing that got me, and whether I've done these ... because, I'm not a city analyst, I wish I was, but net profitability, the argument's always gone that the supermarkets in the UK are incredibly efficient, because basically their net profitability's 2% on average.

Andrew Grant:

2p in the pound is all they make from all the work they do, and Tesco always lauded, back in the day, that they got over 5 pence in the pound profit, and Dave Lewis left on a massive high last year getting it ba...