UK grocer Morrisons slashes profit outlookThursday 13 March 2014 10.12
British grocer Wm Morrison slashed earnings expectations after posting its lowest profit in five years.
It also said it would invest £1 billion in price cuts over three years in a bid to recover.
Britain's fourth-biggest supermarket group, which trails market leader Tesco, Wal-Mart's Asda and JSainsbury by annual sales, said it planned to raise £1 billion from property disposals over three years and return capital to shareholders "as appropriate".
The firm plans to exit non-core activities as well, including baby goods business Kiddicare and its stake in US online grocer Fresh Direct.
"The strategy we are announcing today is a bold and comprehensive response to the fundamental structural changes that are taking place in grocery retail," the company's chief executive Dalton Philips.
Morrisons is losing sales to discounters Aldi and Lidl faster than the rest of its "big four" rivals. It was also late in moving online and opening convenience stores, two areas of growth in an intensely competitive retail market.
The firm said its underlying pre-tax profit in 2014-2015 would be in the range of £325-375m, which at the midpoint is more than half the level analysts expected.
It said it would invest £300m in the 2014-2015 year to narrow the price gap with discounters, a move that follows recent initiatives from Tesco, Asda and the Co-op.
Morrisons said it made a profit before tax and one-off items of £785m in the year to February 2, down 13% on the £901m made in 2012-13 - a second year of decline in a row.
Turnover at the group fell 2% to £17.7 billion, and stripping out the effect of new stores, like-for-like sales, excluding fuel and sales tax, fell 2.8%