Morrisons on track to become a £1bn wholesaler

Morrisons expects to achieve wholesale sales of more than £1bn within a couple of years, according to its latest trading statement.

Interim results for the half year to 30 July 2017 say that the multiple grocer “made good progress with plans for incremental profit from wholesale, services, interest and online.” The company recently announced an exclusive supply deal with McColl’s, which will revive the Safeway brand and help deliver annualised wholesale supply sales in excess of £700m by the end of 2018, and more than £1bn in due course, Morrisons said.

“Along with existing partners, Amazon, Ocado, Rontec and Timpson, we are beginning to make Morrisons more accessible in a capital-light way. We now expect medium-term incremental profit from these areas of £75m-£125m, with McColl’s to make an initial profit contribution from 2018-19,” the statement said.

During the first half of the year, ‘Morrisons at Amazon’ was extended into more London postcodes, and a further 23 Rontec-owned and operated Morrisons Daily convenience stores opened on forecourts, taking the total to 33.

The McColl’s deal will see both Safeway products and national brands supplied to around 1,000 McColl’s convenience stores and 350 newsagents via a phased programme starting in January 2018, with a further 300 recently-acquired stores to be added at a later date. McColl’s will have exclusive access to the Safeway brand, comprising over 400 fresh, frozen and ambient food products, for a year.

Morrisons chief executive David Potts said: “A new Morrisons is beginning to take shape. The capability of the team continues to improve and we are making strong headway with our plans to Fix, Rebuild and 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.”

Total turnover was £8.42bn, up 4.8% year on year, taking into account disposals and underperforming store closures during 2016/17. Turnover excluding fuel was £6.57bn, up 2.6%.

Group like-for-like sales excluding fuel were up 3.0%, comprising contributions from retail of 2.5% (supermarkets 2.1%, online 0.4%) and wholesale of 0.5%.

Operating profit was up 3.4% to £214m, with margin “broadly flat” year on year at 2.5%.