A sales and profits bonanza at Morrisons has been hailed as one of the greatest high street turnarounds following a four-year slump (The Daily Mail). Supermarket boss David Potts hailed a “new Morrisons” on Thursday after the Bradford-based grocer delivered a 40% jump in profits and its seventh consecutive quarter of sales growth (The Telegraph) .WM Morrison has reported its seventh consecutive quarter of rising sales and posted its first growth in profits since it began a turnaround programme more than two years ago (The Times £).
The online cannibalisation of the UK’s supermarkets demands an industry response. Wm Morrison has two, writes The FT’s Lex column. Twin deals with Ocado and Amazon mean Morrisons exists on the internet as both branded retailer and wholesale supplier. Rising pre-tax profits suggest its dual identity is no hindrance, even if it has created unrealistic expectations (The Financial Times £).
It is hard to know how much weight to attach to an apparent slowdown in the pace of improvement at Wm Morrison in the second quarter of its financial year, writes The Times (£). The shares sell on approaching 20 times this year’s earnings, which does not reduce much over the next year. Given all the uncertainties over consumer confidence, that does not suggest much to go for.
“UK retailers sound caution even as outlook brightens”, writes The FT. Profits at the John Lewis Partnership more than halved in the first six months of the year, marking the worst performance among three major UK retailers to give updates — tinged with varying degrees of pessimism — on the outlook for British consumer businesses. (The Financial Times £)
John Lewis Partnership suffered a slump in profits after its Waitrose chain absorbed cost increases triggered by the EU referendum. The employee-owned company said that Brexit and the decline in sterling that it sparked were undermining consumer confidence (The Times £). Profits at John Lewis Partnership have more than halved in the past six months after heavy costs associated with overhauling the business and weakened customer demand from inflationary pressures and political uncertainty (The Telegraph). Profits at John Lewis have slumped after it was hit by one-off costs, including investment in its website, improvements to stores and redundancies (The Daily Mail). Chairman Sir Charlie Mayfield says Brexit is making an impact on the economy and says a ‘serious parliamentary debate’ is now essential (The Guardian). Mayfield told Sky News “The main reason sterling is lower… is because of the decision to leave the European Union and that does have an impact in a number of different ways on different businesses.” (Sky News).
Britain is on the brink of the first rise in interest rates for more than a decade after the Bank of England dropped its strongest hint since the financial crisis that policy should be tightened (The Times £). Sterling hit its highest level for more than a year against the dollar last night as the Bank of England set the scene for an interest rate rise before Christmas (The Daily Mail). The Bank of England has said that higher inflation and a pick up in growth could lead to a rate hike in “the coming months” (The BBC).
Booker, the group behind the Londis and Budgens convenience store chains says tobacco sales have plunged since new rules came into force which mean cigarettes must be sold in standardised packaging bearing graphic warnings of the dangers of smoking (The Guardian). Tobacco sales at Booker Group have fallen sharply after recent legislative changes, yet the wholesaler has managed to report an overall rise in comparable sales in the second quarter (The Times £).
Nestlé is accelerating its expansion in the US coffee market by taking a majority stake in California-based Blue Bottle that values the café and roastery chain at more than $700m (The Financial Times £). Blue Bottle takes it into the high end of the market, operating minimalist coffee bars, selling speciality roasted coffee and bottled coffee drinks (The BBC)