Morrison’s Pandemic-Related Costs Offset Stockpiling Benefit

(Bloomberg) -- Wm Morrison Supermarkets Plc again deferred a decision to pay a special dividend as extra costs from the coronavirus pandemic weighed on the U.K. retailer.

• Britain’s fourth-largest grocer said the cost of recruiting an extra 25,000 workers and implementing safety measures was offsetting higher demand for groceries as consumers eat more at home during the lockdown.

Key Insights

• Like other grocers, Morrison is at least getting a near-term boost. Sales in the first quarter rose by a better than expected 5.7% and it recorded a “substantial increase” in its online business.
• Lockdown-related stockpiling might not help for long, though. Morrison said it had “minimal visibility” on its sales and profit for the current financial year.
• The grocer said government relief on business rates, a type of property tax, this year will broadly offset its higher running costs but it’s unclear how long the crisis will last.

Market Reaction

• Morrison shares rose 1.5% early Tuesday in London. For the year to date they’re down 4%.

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• Read the full statement here.

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