Morrisons posts £1bn loss amid rising debt costs
Quote from VATcal on 17/03/2024, 21:05British supermarket chain Morrisons has reported a pre-tax loss of £1 billion for the year ending October 2023. This hefty loss comes despite the company boasting six consecutive quarters of like-for-like sales growth, highlighting the ongoing financial strain Morrisons faces.
The primary culprit behind the loss is the significant debt incurred during the company's £7 billion takeover by American private equity firm Clayton, Dubilier & Rice (CD&R) in 2021. Servicing this debt resulted in financing costs of a staggering £735 million.
However, Morrisons paints a somewhat different picture when excluding these "exceptional items." Underlying profits, which strip out debt interest costs, actually rose to £970 million from £911 million year-on-year. The company claims this demonstrates the underlying strength of the business.
Morrisons is not the only supermarket facing challenges. The retail sector is fiercely competitive, with discount grocers like Aldi putting pressure on prices. Morrisons has also seen a reduction in staff size, with nearly 9,000 positions cut in the past year.
Looking ahead, Morrisons plans to utilize funds from a recent £2.5 billion sale of its gas station network to reduce its debt burden. The company's new CEO, Rami Baitieh, has acknowledged the need for improvement in product range, pricing, and customer experience. Whether these measures will be enough to turn a profit and compete effectively in the current market landscape remains to be seen.
British supermarket chain Morrisons has reported a pre-tax loss of £1 billion for the year ending October 2023. This hefty loss comes despite the company boasting six consecutive quarters of like-for-like sales growth, highlighting the ongoing financial strain Morrisons faces.
The primary culprit behind the loss is the significant debt incurred during the company's £7 billion takeover by American private equity firm Clayton, Dubilier & Rice (CD&R) in 2021. Servicing this debt resulted in financing costs of a staggering £735 million.
However, Morrisons paints a somewhat different picture when excluding these "exceptional items." Underlying profits, which strip out debt interest costs, actually rose to £970 million from £911 million year-on-year. The company claims this demonstrates the underlying strength of the business.
Morrisons is not the only supermarket facing challenges. The retail sector is fiercely competitive, with discount grocers like Aldi putting pressure on prices. Morrisons has also seen a reduction in staff size, with nearly 9,000 positions cut in the past year.
Looking ahead, Morrisons plans to utilize funds from a recent £2.5 billion sale of its gas station network to reduce its debt burden. The company's new CEO, Rami Baitieh, has acknowledged the need for improvement in product range, pricing, and customer experience. Whether these measures will be enough to turn a profit and compete effectively in the current market landscape remains to be seen.
