Twitter icon Email alerts icon Latest News RSS icon Magazine icon Stay connected:

View the article online at http://citywire.co.uk/wealth-manager/article/a740404

Supermarket shares offloaded after Morrisons ‘meltdown’

by Chris Marshall on Mar 13, 2014 at 10:14

Supermarket shares offloaded after Morrisons ‘meltdown’ A far worse financial update than expected from Morrisons (MRW.L) – which has gone into ‘meltdown’ according to one analyst – hit all of the FTSE 100 listed supermarket groups, in a retail sell-off that prevented the broader index from lift off.

Reporting on what Morrisons’ chairman Ian Gibson called a ‘disappointing year’ the supermarket group announced a pre-tax loss of £176 million for the year to February, hit by £903 million of exceptional costs relating to store write-downs and the group’s exit from its failed foray into online baby and infant retailer Kiddicare.

The group is predicting profits of just £325 million to £375 million for the next year, as it undertakes a major restructuring to cut costs, ditching £1 billion worth of its property portfolio and dishing out the same amount on improvements.

This self-help programme will ‘provide cold comfort to shareholders’ after today’s ‘truly awful’ outlook statement, said Graham Jones, an analyst at Panmure Gordon. ‘The price war is looking brutal at the moment, but this outlook is significantly worse than expected,’ he added.

John Ibbotson, director of Retail Vision, said Morrisons had ‘gone into meltdown’.

‘The market share of the big four supermarkets is shrinking and none more so than Morrisons with its catastrophic fall in sales and market share,’ said Ibbotson.

More positive analysts reckoned that a 10.7% rise in Morrisons’ final dividend, to 9.2p, would support the shares over the coming months.

Despite that payout, investors appeared to side with the critics, sending Morrisons shares down nearly 8% to 214p.

Sainsbury (SBRY.L) was next in line, off 6.6% to 311p, while Tesco (TSCO.L) dropped 2.7% to 305p. Marks & Spencer (MKS.L) was lumped in with the supermarkets, down 1.2% to 467p.

Share sell-off on pause, but gold in demand

The retail slump prevented the FTSE 100 from making gains. The index was flat at 6,624, at least offering investors a pause from the sell-off that has seen blue chip shares fall for the past four trading days.

Despite the break in equity selling, money was still flowing into perceived safe havens. Gold continued to rise, up 0.5% to $1,372 an ounce, while the Japanese yen rose 0.2% to 102.53 against the US dollar.

Sign in / register to view full article on one page

leave a comment

Please sign in here or register here to comment. It is free to register and only takes a minute or two.

News sponsored by:

Sponsored Video: Bringing it all back home


As the UK coalition government strives to rebalance the national economy, so called 'reshoring' looks set to play an increasingly important role in economic recovery.

Today's top headlines

Investing for income in a changing environment


With talk on interest rates on the horizon, our latest roundtable debate covers income investing against a changing backdrop

More about this:

Look up the shares

  • WM Morrison Supermarkets PLC (MRW.L)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • J Sainsbury PLC (SBRY.L)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Tesco PLC (TSCO.L)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Marks and Spencer Group PLC (MKS.L)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them

Archive

On the road

Click here to find out more from the Audience Development team.

Sorry, this link is not
quite ready yet