Morrisons sees signs of Brexit stockpiling by shoppers | Business News
Morrisons has revealed evidence of hoarding by customers as the clock ticks down to Brexit with the outcome still unclear.
With just 16 days to go until the UK is due to leave the EU, the supermarket chain admitted it had seen sales growth in the high single digits for some essential items.
Chief executive David Potts said: “We’ve seen quite a tick up in painkillers and toilet rolls this financial year.
“Whether that’s got any bearing on how people are feeling about the Brexit process, I don’t know.”
His remarks build on reports that shoppers are taking action in case a hard Brexit results in delays to supplies and shortages.
A Sky Data poll just last week suggested a quarter of the population had either bought more goods than normal or were thinking about doing so.
The company revealed details on recent spending habits after it had released its financial results for the year to 3 February.
Morrisons said it was awarding further special dividends to shareholders despite a slowdown in recent retail sales growth.
The UK’s fourth-largest supermarket chain’s wholesale division, which includes partnerships with McColl’s and Amazon, continued to drive profitability.
Morrisons reported a rise of almost 9% in underlying pre-tax profits to £406m.
When the effects of one-off costs, such as £19m on property disposals, were included profits were 16% down at £320m.
Full year like for like sales were 4.8% higher, up from 2.8% in the previous year, as its wholesale arm boosted business.
Comparable sales at its retail arm – the supermarket – were 1.5% up over the 12 months as the sector continues its price war fed by the rampant growth of discount chains Aldi and Lidl.
That growth was achieved despite a significant slowdown to 0.6% in the final three months.
Mr Potts blamed a more “challenging autumn as consumers were more cautious in more uncertain times”.
Morrisons confirmed it had stockpiled certain lines in case Brexit resulted in supply chain disruption.
However it maintained its outlook and said it was expecting to supply all McColl’s convenience stores towards the end of the year and was trialling the conversion of 10 McColl’s stores to Morrisons Daily convenience stores.
“We remain confident that Morrisons still has many sales and profit growth opportunities ahead, and expect that growth to be meaningful and sustainable”, the company reported.
It confirmed a special dividend of 4p-per-share, taking the total dividend for the year to 12.60p.
Shares were 2% up on opening.
Sophie Lund-Yates, equity analyst at Hargreaves Lansdown, said: “The real jewel in Morrison’s crown is its wholesale supply deals with the likes of Amazon and McColl’s – £700m of sales came from the wholesale division this year – and that number’s expected to hit £1bn soon enough.
“That added dough is needed to feed the bottom line, in what has become an increasingly competitive industry.”