“Morrisons turns a corner as profits rise” writes The Times (£) this morning, noting that the supermarket is back in profit and its sales are beginning to stabilise “in the first sign that the grocer’s slow return to health is gaining ground”. The Guardian says it is Christmas drink deals that brought the “embattled supermarket” its first quarterly sales gain in four years.
With a slightly different take, The Daily Mail writes: “Morrisons has unveiled a fourth straight year of declining profits as it closed stores and slashed costs in a bid to turn itself around as the sector price wars continue to take a toll.”
However, much of the coverage this morning focusses on Morrisons slashing its dividend. “Morrisons cuts dividend as it warns turnround will take time” is the headline in The Financial Times (£), which said the supermarket eked out a slightly better than forecast increase in fourth-quarter sales, but the weak rate of growth highlighted the uphill struggle the major chains are facing in the UK’s competitive grocery sector. The Telegraph said Morrisons had “slashed” its dividend to “fund its turnaround”.
The FT’s Lex column summarises that “Shoppers not shareholders are the immediate winners from the supermarket’s revamp”. The paper writes: “The pace of store closures will slow in 2016, but price cuts will continue. Shoppers, not shareholders, will be the immediate winners from Morrison’s back-to-basics revamp. Who said capitalism doesn’t work for consumers?” (The Financial Times £)
The other big supermarket news of the day was the Waitrose/John Lewis annual results. John Lewis was held back by tougher competition in its grocery business, according to The Financial Times (£) as it revealed a near-10% in pre-tax profits last year. The Times (£) blames “pensions and falling food prices” for the profits slump.
But most of the coverage focusses on the annual dividend received by John Lewis employees. “John Lewis Partnership bonus cut for third year in a row” is the headline in The Telegraph. The Guardian says the annual windfall slips to 10% of salary for trust’s 91,000 staff with fall blamed on tough trading and high pension charges, while The Daily Mail’s headline is: “John Lewis cuts bonuses to its employee ‘partners’ as it find it is not immune to the retail gloom”.
In a separate article on John Lewis staff The Telegraph writes: “From the cheers that reverberated around the flagship Oxford Street store of John Lewis on Thursday morning, one would never have guessed the annual staff bonus had been cut to a 13-year low.” Similarly The Times (£) writes: “The John Lewis Partnership may be one of Britain’s most understated businesses, but it never knowingly underplays the one day of the year when staff get to celebrate their bonus. Yesterday was no exception.”
On a busy day for retail news, the other major focus is Home Retail Group and Argos. According to The Financial Times (£) Home Retail Group stoked the bidding war surrounding its catalogue business by revealing that Argos had significantly more cash than anticipated one week before final offers are due. The Times (£) agrees that “decent” results at Argos and the boost in cash “has put pressure on its two rival suitors to up the value of their bids”. Home Retail has yet to work out a formal process to handle any revised bids from its potential new owners, according to The Guardian. Home Retail is talking to both sides and waiting to see if either would put forward a firm offer before putting any process in place.
Nevertheless, The Telegraph highlights the “tough trading year” for Argos noting it has only managed to halve the pace of its sales decline. The Daily Mail notes that shoppers using improved delivery services boosted sales at Argos as it revealed it now sells more than half its products online.
Elsewhere, The FT has an interview with Lavazza CEO Antonio Barravalle in which he targets €2bn of sales in the next five years. ‘You either sell up or you grow. There is no alternative,’ says Barravalle Italy’s best-selling coffee brand, has a warning for Starbucks as the coffee and frappuccino giant enters the Italian market for the first time: you have much to learn. (The Financial Times £)
As many as 84% of fast-food outlets audited last year underpaid at least one of their workers, according to a study by an employment relations firm. (The Guardian)
Carrefour confirmed a third consecutive year of profit growth last year as the world’s second-biggest retailer by sales saw a strong recovery in its European markets. (The Financial Times £)