Morrisons shuts stores as Potential Loss of 900 Jobs

It also reported a 47% drop in half yearly profits before tax of £126m.

New chief executive David Potts, who started in March, said they regretted the proposed closure of their eleven stores.

"This is a difficult decision but one which we cannot see any way through to make those stores viable," he said.

The closures are mainly smaller-sized supermarkets, but Mr Potts would not disclose their locations because he said they wanted to inform staff first.

 

On Wednesday the firm announced it was selling 140 loss-making "M" local convenience stores for about £25m.

The shops will be rebranded as "My Local". The 2,300 staff will be kept on, with an extra 200 jobs to be created by reopening 10 shops that are currently closed.

This forms part of the company's £1bn cost saving programme, as it now tries to concentrate on its core supermarket business.

 

Morrisons' fortunes

• 47% drop in pre-tax profits
  
• 11 stores to close
  
• 900 jobs at risk
  
• 140 convenience stores being sold
  

Phil Dorrell, partner at consultants Retail Remedy welcomed the sale of their convenience stores.

"Now that the leaky bucket that was "M" Local stores has been sold to a team led by retail entrepreneur Mike Greene, we should expect that Morrisons's profit future will look healthier."

A day after the deal, Mr Greene, the chief executive of My Local, announced a five-year supply deal with convenience store giant Nisa Retail.

The agreement will give them the flexibility to access Nisa's fresh produce while also allowing their individual stores to buy from local and regional suppliers.

'Old-fashioned'

Morrisons remained cautious but optimistic about its future, saying in its statement: "Customers and colleagues are beginning to notice improvements, but the turnaround will take time."

Like-for-like sales for the period up to August dropped 2.7% compared with the same period last year.

Total turnover during the period was £8.1bn, falling 5.1% year-on-year.

"Morrisons stores are old-fashioned, not as cutting edge as their rivals but they are dragging themselves into the modern age," said Julie Palmer, retail analyst at Begbies Traynor.

She said although they are not as slick as their competitors they have an established supply chain and the provenance of their food was good.

Morrisons continues to fight a fierce price war with its big rivals, Tesco, Asda and Sainsbury, who are all being squeezed by discounters Aldi and Lidl.

Despite the economic recovery bringing greater consumer confidence, Morrisons said customers still look for value for money. 

Morrisons share price fell by around 3% in the wake of their gloomy figures.