Morrisons profits dented by £155m Covid-19 costs

Morrisons has revealed its HY profits were dented by £155m of Covid-related costs.

During the first half of 2020/21, Morrisons said “all its efforts” were fully focused on deploying its assets in the “best way” to enable its colleagues to help feed the nation during the Covid-19 crisis.

For the first six months ending 2 August, it reported that group like-for-like sales excluding fuel was up 8.7%, comprising a retail contribution of 7.9% and wholesale contribution of 0.8%. While it added its Q2 performance “accelerated significantly” on Q1 with LFL sales excluding fuel of 12.3%, comprising retail of 11.1% and wholesale of 1.2%.

Total revenue was £8.73bn, down 1.1% year on year with total revenue growth excluding fuel up 8.8%.

Morrisons also reported operating profit before exceptionals of £201m, down 20% compared with the previous year.

The grocer said profit was temporarily impacted by the “considerable” costs of Covid-19, especially extra payroll, bonus, colleague and customer safety protection measures, distribution costs, and seasonal waste and markdown, plus various initiatives for food banks, charities and local communities.

However, it added the £155m in costs was partly mitigated by four months of business rates relief of £93m, meaning it incurred a net first half Covid-19 cost impact of £62m. Without the extra cost, it said operating profit before exceptionals would have grown £11m year-on-year.

David Potts, chief executive, said: “From the start of the pandemic we stepped up and put the company’s assets at the disposal of the country to help feed the nation.

“Morrisons is at the heart of local communities and responded quickly when it mattered most, and we are very grateful for the British public’s appreciation of all the vital work our colleagues are doing. I believe we are seeing the renaissance of British supermarkets.”

He added: “We are now looking forward to holding on to what we created in the first half, building on our colleagues’ inspiration and innovation, and sustaining the momentum of a broader, stronger Morrisons. I’d like to again thank every Morrisons colleague for their incredible efforts: you’ve earned your key worker status several times over.”

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