The smallest of the Big Four supermarkets can justifiably feel disappointed in its 2017 performance. Despite a string of strong updates the stock ended up dipping 5% across last year, with its second half decline actually sparked by an interim report in September that saw Morrisons post a 3% jump in like-for-like sales and a 40% surge in pre-tax profit to £200 million.
Since 2018 the stock has ranged between £2.10 and £2.30, with a brief jump to 3 month high of £2.38 following January’s post-Christmas statement. WM Morrison Supermarkets PLC now sits at a current trading price of £2.25
Back in November the firm posted a decent 2.5% rise in Q1 like-for-likes excluding fuel, a figure that, however healthy, fell short of the 2.8% forecast by analysts and was a notable drop from the 3% growth managed in the first half of the year. In a telling sign the supermarket stated that it had ‘again worked hard during the quarter to limit the impact of lower sterling on imported food prices’; it’s an issue plaguing the entire sector, but one that leaves Morrisons more in danger of losing trade to Aldi and Lidl than its bigger Big Four rivals.
As for its most recent update, the company revealed LFLs were up 2.8%, a tad higher than expected, for the 10 weeks to 7th January, with the added bonus of a 25% increase in sales of its ‘Best’ premium range and a 10% rise in online sales. It also said that the previously announced wholesale supply deal with McColl’s stores would be starting that month, making it something to look out for in Wednesday’s annual report.
In terms of those full year figures, investors will be hoping that the like-for-like numbers revealed in January held across the whole of Q4, meaning Morrisons would be on track for annual comparable sales growth of around 2.8%. There will also be great interest in how much impact inflationary pressures have had on margins, alongside what kind of guidance the supermarket will give for its financial 2018.
WM Morrison Supermarkets PLC (LON:MRW) has a consensus rating of ‘Hold’ alongside an average target price of £2.29.
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