Cost of living crunch leaving shoppers ‘subdued’, warns Morrisons

Private equity grocer Morrisons reported a slump in profits as it warned that the tight cost of living had made shoppers “very moderate.”

The group, recently passed over as the UK’s fourth-largest supermarket by German discounter Aldi, posted a profit of £177 million for the three months to July 31, about half of the £356 million made a year ago. was delivered, as sales excluding fuel decreased by 3.1 per year. cent.

Morrisons attributes the decline to “temporary and transition factors” and to “unprecedented inflationary pressures” that hit food production.

Boss David Potts said it was “clear” that cost-of-living habits were beginning to change as shoppers chose cheaper brands and bargains.

“The speed, magnitude and severity of the cost and energy price increases, exacerbated by the horrific war in Ukraine, had significant repercussions,” Potts said.

He said it was doing everything it could to keep prices down as Britain’s biggest supermarkets are fighting a cutthroat fight for customers.

The drop in earnings is another setback for Morrisons, who on Tuesday saw his chief operating officer and long-serving executive Trevor Strain retire.

He had previously held the position of finance chief and was tipped to become the next boss, and his departure came three months after commercial director Andy Atkinson announced plans to leave.

Earlier this year, chief financial officer Michael Gleeson left for rival Asda. The boardroom exodus followed the sale of Morrisons to US private equity firm Clayton, Dubilier & Rice (CD&R) in a £7 billion deal last October.

But CD&R’s dip into the Bradford-based chain — founded in 1899 as an egg and butter stall — was followed by a rough patch, with the loss of its ‘Big Four’ status likely raising questions about whether it was right to to leave the market. stock market.

Morrisons’ sales fell 4.1 percent in the three months to September, according to figures from consultants Kantar, with market share falling to 9.1 percent from 9.8 percent, relegating it to fifth in the UK supermarket rankings.

The company is under enormous pressure from Aldi and its rival German discounter Lidl, both of whom have a strong presence in the heart of Morrisons in the north of England.

The pressure also showed no signs of ceasing after Aldi pledged this week to do whatever it takes to keep its prices the lowest in Britain.

Aldi has been attracting new customers over the past 12 weeks as shoppers try to make their money go further.