Morrisons continues revival with nine-year high for sales growth

Morrisons like-for-like sales growth hit a nine-year high of 6.3% in the second quarter, marking the eleventh consecutive quarter that sales have risen.

Meanwhile, underlying profit before tax rose 9%to £193m with total first half revenue reaching £8.8bn.

Morrisons chief executive David Potts said Morrisons “continued to become broader, stronger and more popular”.

The retailer also explained that its “Fresh Look” programme would be extended to more than half of its 500 stores, with significant improvements in product range and customer service.

As well as the retailer developing its offers for online, wholesale, local and in-store services.

Analysis: Nicholas Hyett, equity analyst at Hargreaves Lansdown

Morrisons continues to make progress with its turnaround. Retail sales are growing steadily, while its wholesale division is turbo-charging the group’s topline. Flat margins could be a touch disappointing, but given the presumably lower margin in the wholesale business, it still suggests an improvement in the performance on the retail side.

With a high proportion of freehold stores and debt falling, the group’s balance sheet looks robust, and that means cash is available to return to shareholders despite ongoing investment.

Longer term, the group needs to strengthen its online offering, and convenience has also been a weak spot. However, management are taking steps to improve both areas and initial signs are good.

The good news is reflected in the share price though and a PE ratio of 19.4, versus 15.3 for both Tesco and Sainsbury, puts Morrisons in the unusual situation of being the pricier option in the supermarket space.