Morrisons ramps up online but profits slide in H1 2020

Morrisons has revealed it more than doubled its weekly online home delivery orders in the six months up to 2 August 2020, as the supermarket chain ramped up its eCommerce capabilities in response to the Covid-19 pandemic.

It also expanded its online order capacity five-fold over this period. As a result, there was “very substantial” growth across all its digital shopping channels - Morrisons.com, Amazon, food boxes, doorstep delivery and Deliveroo.

Initiatives taken by Morrisons to increase its online delivery capacity over the half year have included extending its online grocery delivery service via Amazon Prime and a rapid delivery partnership with Deliveroo.

This online growth helped the retailer increase total revenue excluding fuel 8.7% year-on-year over the six months to 2 August. Although including fuel, sales fell 1.1% due to “very low demand for fuel during and after lockdown”.

Pre-tax profit fell by 28.2% to £145 million, which Morrisons said was due to incurring £155 million in extra direct costs as it adapted to the Covid-19 crisis. However, it expects its first-half net cost to be offset by a similar net-benefit in the second half as a result of business rate relief.

Morrisons stated: “As well as the timing of direct Covid-19 costs/lower business rates, the mix of the very strong first-half sales growth was weighted towards online channels and lower margin categories. In addition, fuel sales growth was very negative, our cafés were temporarily closed, and we invested in supporting our colleagues, NHS workers and farmers with extra discounts.”

David Potts, chief executive at Morrisons commented: “From the start of the pandemic we stepped up and put the company’s assets at the disposal of the country to help feed the nation. Morrisons is at the heart of local communities and responded quickly when it mattered most, and we are very grateful for the British public’s appreciation of all the vital work our colleagues are doing.”

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