Morrisons has announced significant job cuts, eliminating over 3,600 roles despite reporting a statutory pre-tax profit of £2.26 billion for the year ending October 29, 2024. This move comes as the supermarket chain, now owned by private equity, navigates a challenging market landscape, facing pressure from discounters and larger rivals. The job losses are attributed to various factors, including the sale of its petrol forecourt business, restructuring of manufacturing sites, and in-store productivity changes.
Key Takeaways
- Morrisons reported a £2.26 billion statutory pre-tax profit, a significant turnaround from the previous year’s loss.
- Over 3,600 jobs have been cut as part of cost-saving measures.
- The profit was boosted by a £2.6 billion gain from the sale of 337 petrol forecourts.
- Losses from continuing operations halved to £538 million.
- The company is facing intense competition from discounters like Aldi and Lidl, as well as market leader Tesco.
Financial Performance and Debt
Morrisons’ financial results show a statutory pre-tax profit of £2.26 billion, a stark contrast to the £1.5 billion loss recorded in the prior year. However, this profit was substantially influenced by a £2.6 billion gain from the disposal of its petrol forecourt unit to Motor Fuel Group (MFG). Excluding this one-off gain, the company’s continuing operations, which include groceries and food manufacturing, incurred a loss of £538 million, a reduction from £1.09 billion in the previous year. The supermarket chain was acquired by US buyout group Clayton, Dubilier and Rice (CD&R) in 2021, saddling it with significant debt. While the sale of petrol forecourts helped reduce its debt to £3.5 billion, the cost of servicing this debt remains a concern, particularly with rising interest rates.
Job Cuts and Restructuring
The reduction of over 3,600 jobs is part of a broader cost-cutting strategy. These cuts are linked to the sale of petrol stations, the closure and restructuring of some manufacturing facilities, and changes aimed at improving in-store productivity. Morrisons states that many of these reductions were achieved through natural wastage. In addition to these job losses, the company has also closed 52 in-store cafes, impacting an additional 365 roles, and shut down all 18 Market Kitchens, 13 florists, 35 meat counters, 35 fish counters, and four pharmacies. These measures reflect a significant overhaul of the business aimed at streamlining operations and improving efficiency in a competitive market.
Market Position and Expert Opinions
Morrisons, currently the fifth-largest supermarket in the UK with an 8.4% market share, is facing intense competition. Retail experts note that the company is being squeezed by discounters Aldi and Lidl, who are rapidly gaining market share, and by market leader Tesco. One retail expert described Morrisons as being "very much in decline" and struggling with its market positioning, being "stuck in the middle" between low-cost providers and the mass market. The new chief executive, Rami Baitieh, who joined from French giant Carrefour, is working to address these challenges, but experts suggest that "root and branch reform" is needed for the grocer to effectively compete with its rivals. The company’s revenue also saw a decline from £18.3 billion to £17 billion, despite a 3.9% rise in like-for-like sales.
