William Morrison Supermarkets posted a 4 percent fall in full year profits and issued a cautious forecast for the UK grocery market in 2013.
Britain's fourth-largest grocery store chain said full year profits fell to £901m from £935m in the previous financial year as like-for-like sales declined by 2.1 percent, the company said in a statement published Thursday on its website. The Bradford, England-based group said it would raise its full-year dividend by 10 percent to 11.8 pence per share. A large portion of the lost market share has been linked to Morrisons absence of an online grocery business, analysts have said. Morrisons have said in their results presentation that they play to launch an online offering in 2014. The group said it expects the challenging conditions in the UK retail grocery market to continue through the coming year.
"The sustained pressure on consumer spending was reflected in our like-for-like sales performance, which was not as good as it should have been," said CEO Dalton Philips. "We have implemented a range of measures to address this and are making good progress in improving our promotional effectiveness and in communicating our points of difference. Recent events have underlined why it's so important that we tell our customers how and why we're different and what our vertical integration really means for them. Food quality, provenance and the issue of trust are at the forefront of consumers' minds and these are all areas where Morrisons has something genuinely different to offer."
Philips told investors on a conference call after the announcement that he expects like-for-like sales to be "principally negative" this year.
In a separate statement, Ocado, the online grocery store group run by former Marks & Spencer Group CEO Sir Stuart Rose, confirmed that it was in talks with Morrisons regarding a technology agreement that may lead to a license some of its intellectual property. The talks do not involve discussions regarding an equity stake in Ocado, the company said.
Ocado reported a 14.4 percent rise in online grocery sales for the weeks ending on 24 February.
Morrisons said in January that overall like-for-like sales for the 6 weeks ending on 30 December declined by 2.5 percent. Sales not including fuel fell by 0.9 percent from the same period in 2011. Accountancy and consulting group BDP LLP said like-for-like sales increased by 1.9 percent for Brtiain's larger retailers in the five weeks that ended on 29 December thanks to a wave of online shopping and bargain hunting.
The group's annual High Street Sales Tracker said online sales surged 30.9 percent from the same period last year while footfall on the weekend before Christmas was up 22 percent.
Ocado reported a 14 percent rise in volumes for the six weeks ending on 6 January last week taking sales to just over £91m and said it had added new customers in critical markets in the outer London suburbs and the Southeast of England.
Shoppers will spend £87bn online in 2013, according to a forecast in December's IMRG Capgemini eRetail Sales Index, a 12 percent increase on the year before and a stark warning to high street retailers that they must adapt their businesses to changing consumer habits or risk being the next name to go under.
Online grocery sales alone surged past £5bn last year and have grown by 90 percent since 2008, according to the research group Kantar Worldpanel.
William Morrison shares rose 0.44 percent in early London trading to change hands at 272.8 pence each. The shares have risen nearly 3 percent so far this year.
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