The share price of supermarket chain Wm Morrison has slid 1.1% despite a set of results that indicate the formerly troubled company’s turnaround is proving a success and shareholders being rewarded with a special dividend. It’s just a few years since the survival of Morrison’s was in significant doubt. Against that backdrop the Bradford-based grocer will have been delighted to report an 8.6% rise in pre-tax profit for the year ended 31st December 2018. Overall revenues also grew by 2.7% to £17.7 billion.
Like-for-like sales, minus fuel and VAT, were up 4.8% on 2017. The metric is used as an industry benchmark and can be considered to represent a strong sign of the supermarket’s return to health. The special dividend announced, 4p a share, adds to the 2p special dividend announced earlier in the year and will have pleased shareholders who remained loyal as the Morrison’s share price dropped to 214.7p last year from an August high of 266.8p. The total dividend for the year, including the ordinary dividend totalled 12.6p, a near 25% improvement on the previous year. That represents a 5.6% return on the current share price of 224.9p.
Over three years, Morrison’s has now succeeded in raising its dividend by a total of 150%, a fact highlighted by chief executive David Potts. Potts, formerly an executive at rivals Tesco, took over as CEO in March 2015 and can be largely credited with the successful turnaround. Commenting on progress and how it has been achieved, Potts stated:
“This turnaround is based on improving the shopping trip for customers, making Morrisons more popular and accessible, and our customers are noticing. Most pleasing of all was another big increase in customer satisfaction, now up a full 20 percentage points in the last four years, which is all down to the friendliness and expertise of our team of unique food makers and shopkeepers.”
Morrison’s development of its wholesale business, which has brought the Safeway brand back to life (Safeway was a chain of supermarkets and convenience stores acquired by Morrison’s in 2004 and rebranded), is a highlight of the Potts-inspired change in fortunes. £700 million is sales by the unit beat its 2018 target and, without putting a strict timeline on it, the CEO stated he expects turnover to surpass £1 billion ‘in due course’.
Progress towards that £1 billion milestone should be supported by the supply of an additional 300 McColls convenience stores later in the year.Risk Warning:
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