Morrisons sales soar in post-Covid bounce

Shoppers are in the mood to ‘spend, spend, spend’ as Britain recovers from the pandemic and lockdown restrictions ease, according to the boss of Morrisons.

Dave Potts said ‘positivity is all around’ as he reported signs that the UK economy was bouncing back to life.

Britain’s fourth-largest grocer has enjoyed higher fuel sales as people return to shops and offices and visit family and friends. And demand for sandwiches, sushi, crisps and drinks at lunchtime is up.

Morrisons boss Dave Potts said ‘positivity is all around’ as he reported several signs that the UK economy was bouncing back to life

‘The country seems to be booming,’ said Potts, 64.

‘The pandemic is not yet over, but it is in retreat across Britain and there is much to be positive about as something approaching normal life begins to take shape.

‘The nation has a summer of socialising and sport to look forward to and we’ll all be able to rediscover the joys of meeting up and eating well together.

‘We’re looking to the future with confidence.’ In the 14 weeks to May 9, sales grew 8.7 per cent on a like-for-like basis, excluding fuel, compared to the same period in 2019.

Morrisons said it was on track for profits this year of around £435million – more than the £431million it would have achieved last year without handing back business rates relief.

But with stock markets around the world in retreat, its shares fell 0.4 per cent, or 0.7p, to 182.35p.

Morrisons expects brisk business as the UK welcomes back events this summer, including the Euro 2020 football championships, following strong sales on Mothering Sunday and over Easter.

The wholesale division was up 21 per cent – thanks to a new partnership with McColl’s convenience stores, where Morrisons supplied products to 230 extra sites. 

It is also supplying groceries to the three new cashier-less Amazon Fresh stores in London.

Grocers are expecting a bumper year as Covid costs, such as safety equipment and sick pay, fall. In the past three months Morrisons footed a £27million bill for Covid-related costs, mostly from second-wave absences.

At the same time, families are expected to spend more time celebrating at home than before the pandemic, enjoying barbecues and dinners rather than eating out. 

But, as hospitality prepares to reopen indoors on Monday, some of the extra food and alcohol sales will recede. Morrisons said profits will remain strong as sales in higher-margin areas – including takeaways, food-to-go and its 400 cafes – will take their place.

The optimism reflected the outlook at its larger rival Tesco, which said operating profits will return to pre-pandemic levels this year thanks, in part, to a ‘strong recovery’ at its wholesale business Booker.

Analysts expect Sainsbury’s to post underlying pre-tax profits of £621million next year, up from £586million in the year before the pandemic. 

The major players have been battling it out on price in recent months, in expectation of a post-pandemic charge from the German discounters.

Tesco and Sainsbury’s have both launched pricing campaigns that match prices to Aldi. Morrisons yesterday said it ‘will become more competitive again’, laying the groundwork to open a new front in the supermarket price war.