Can Morrisons pick up a trolley full of new investors following Wednesday’s full year results?
The supermarket went on quite the journey in 2018, travelling from 19-month lows of £2.06 in April to near 5-year highs of £2.70 in late August, all the back to a closing price of £2.12 in December. In 2019 it has already replicated that pattern in miniature, quickly climbing to £2.45 by early February, only to fall to a current trading price of £2.29.
January’s post-Christmas update did little for the stock. While for the 9 weeks to 6th January group like-for-like sales rose 3.6%, the Retail contribution was just 0.6%, the rest coming from Amazon-supplying Wholesale division.
That’s less than half the Retail growth seen in Q3 and way off the 2.1% posted for the same period the year previous (a period that did admittedly including one extra week). This as number of transactions actually fell 0.9% due to what Morrisons dubbed a ‘change in consumer behaviour’, i.e. the continued rise of Aldi and Lidl and some Brexit-inspired cautiousness from shoppers.
Investors are going to want to know whether that ‘change in consumer behaviour’ continued throughout the rest of the fourth quarter, and whether it has carried over into Morrisons’ financial 2019/20. And though, in January, it said its expectations for 2018/19, there are going to be questions about the impact of this shift on the bottom line going forwards.
WM Morrison Supermarkets PLC has a consensus rating of ‘Hold’ alongside an average target price of £2.58.
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