Morrisons profits rise predicted

Morrisons profits rise predicted


Supermarket Morrisons is expected to post an increase in pre-tax profits on Thursday

Supermarket Morrisons is expected to post an increase in pre-tax profits on Thursday despite a year when competition in the sector has been intense.

Analyst forecasts show a 12% hike in full-year pre-tax profits to £861 million in the year to January 31, up from £767 million the previous year.

The UK’s fourth biggest chain defied the Arctic conditions over Christmas and beat City expectations by posting 1% like-for-like sales growth, excluding fuel and VAT.

According to industry figures, Morrisons maintained its market share at 12.3% in the 12 weeks to February 20, while Tesco and Asda slipped and Sainsbury’s grew.

The City will be looking for further guidance on commodity price pressures, which have hit food companies such as Unilever and Nestle in recent months.

Morrisons took the first major step in its e-commerce strategy last month with the acquisition of online retailer Kiddicare for £70 million.

Pub chain JD Wetherspoon will reveal how far its profits have been impacted by the rising cost of food and drink on Friday.

The chain, which operates nearly 800 outlets, saw like-for-like sales rise 2.3% in the six months to the end of January as its cheap prices proved a draw to customers. But it recently admitted its profit margins have come under pressure as it struggles to pass on cost hikes in the face of increasing competition from other pub chains.

Analysts estimate that its operating margin has slipped to about 9.4% from 10% a year ago after being squeezed by the rise in VAT and alcohol duty, higher interest charges, wage costs and utility bills. The company admitted it put up prices by an average of 3% to 4% in October after facing price hikes from suppliers in its first non-tax-related price hike of the year but analysts say it has yet to fully pass on its rising costs.

Analysts at Numis Securities predict that Wetherspoon’s pre-tax profits in the year to July will decline by 4% to £68.4 million although this is based on the assumption that margins and sales will increase in the second half of the year.



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