Morrisons CEO David Potts

Morrisons has delivered its first year of like-for-like growth and underlying pre-tax profit since 2011/12.

The retailer said like-for-like sales excluding fuel for the year to 29 January were up 1.7%. This was boosted by a 2.5% like-for-like improvement in Q4, Morrisons strongest quarter for seven years.

Total sales grew 1.2% to £16.3bn despite the closure of a number of stores during the year, while underlying pre-tax profit rose 11.6% to £337m, at the upper end of its guided range of £330m-£340m.

“Our full year of like-for-like sales and profit growth was powered by listening to customers, and shows what our hard-working team of food makers and shopkeepers can do.,” said CEO David Potts.

“But, it’s only one year. Our turnaround has just started, and we have more plans and important work ahead. If we keep improving the customer shopping trip, I am confident that Morrisons will continue to grow.”

Morrisons today also announced plans to grow its trial of Morrisons Daily convenience stores with Rontec to 50 stores. There are currently 10 sites up and running which are owned and operated by the independent forecourt operator. Morrisons plans to open a further 40 stores with Rontec in the first half of this year.

It confirmed that it also plans to end its relationship with rival forecourt operator Motor Fuel Group, with which it has been running a trial of five Morrisons Daily stores.

“In October 2015 Motor Fuel Group (MFG) announced a pilot with Morrisons to trial their convenience food offer in five of their petrol filling station shops,” read An MFG statement.

“MFG and Morrisons have now decided to draw a line under the trial. The Londis brand, which already features on over 300 of MFG’s forecourts, will be extended to these stations in April.”

Potts said he was particularly pleased with the fourth quarter performance as it was set against strong competition and it lapped its improved trading from the year before. He also noted a significant slowing down of deflation in the quarter. Deflation during Q4 was zero compared to -2% for the year as a whole.

During the second half, Morrisons introduced a new automated ordering system into all stores in grocery and many fresh categories. It said it will roll it out across all categories during 2017.

The system uses cloud technology and store-specific historic sales data to forecast stock requirements. The retailer said it is reducing cost and stock levels, while also saving time for staff, and providing a better offer for customers. Availability is improving, with gaps reduced by up to 30%.

Morrisons also said it was improving staffing levels in store to ensure more colleagues are available for customers at the busiest times. It said customers were noticing these improvements as there are shorter queues and its satisfaction survey scores remain high. It said it was serving more customers, with LFL transactions up 4.0% year-on-year which is 450,000 more each week.

“Food retail is a simple business, but it is not easy,” said Morrisons chairman Andy Higginson.

“Only consistent and outstanding execution differentiates. I am delighted that the whole Morrisons team are making a real difference. I am confident that strong execution will drive sustained dividend growth and improving returns for Morrisons shareholders.”