Supermarket Morrisons has reported a 12.7 per cent increase in profit for the first half of the year, as a major turnaround plan implemented by chief executive David Potts starts to bear fruit.
The retailer – the UK’s fourth biggest in terms of annual sales after Tesco, Sainsbury’s and Asda – said on Thursday that underlying pretax profit had come in at £177m in the six months to the end of July, beating the average estimate in a Reuters poll of analysts.
The company also upped its target for incremental profit from wholesale, services, interest and online in the medium term. It now expects that figure to be between £75m and £125m from a previous forecast of £50m to £100m.
Since Mr Potts took over the chain as CEO in 2015, Morrisons has taken on cut-price rivals like Aldi and Lidl by improving customer service, offering more competitive prices and a better range of products.
“Morrisons has quite simply been transformed over the past two years,” said John Ibbotson, director of the retail consultancy Retail Vision.
"Given the cut-throat market we're in, this has been one of the great retail turnarounds. Dave Potts has kept his turnaround strategy simple and in the grocery world simple is generally best,” he said.
"By re-energising its food proposition and in putting customers first, Morrisons has regained their trust. This is another warning shot to the discounters, Aldi and Lidl.”
Neil Wilson, a senior market analyst at ETX Capital, agreed that Mr Potts’ strategy is “bearing fruit”.
The company on Thursday said that it was “confident” that it could continue to grow.
“Our supermarkets continue their focus on improving the customer shopping trip and, in wholesale supply, we are beginning to realise some of the opportunities that our unique team of food makers and shopkeepers bring us,” said Mr Potts. "A new Morrisons is beginning to take shape”.
