MORRISON SUPERMARKETS PLC

Morrison Supermarkets plc



Executive Summary

Morrison Supermarkets LLC (Morrison) is one of the U.K.'s largest food retailers. It is engaged in the operation of retail supermarket stores and associated activities. It offers wide range of goods, which include fresh foods, groceries, home and leisure products, beers, wines and spirits through its stores. It operates 365 stores, 13 manufacturing sites and 12 distribution centres in the U.K. The company offers a range of branded label products, includes The Best; Eat Smart, BettaBuy, Organic, free from, At Home, First Home, and Complexions and private label products. Company continued to broaden its customer appeal over the years by maintaining our focus on fresh food and value and providing great customer service through a wide range of stores from 10,000 to 40,000 square feet. With the building blocks now in place company has a strong platform to take Morrison's to a nationwide company. The report provides a comprehensive insight into the company, including business structure and financial operations, the hallmark of the report is the detailed financial analysis.

Morrison Supermarkets plc

Industry Overview

2006/07 was an unusual year for UK grocery retailers; it began in similar fashion to the pattern of previous years, with price deflation. This was characterised by high profile price cuts on certain commodity items, such as milk, bananas and bacon. No volume retailer can afford to be out of line with the market on such staple items, but equally cutting prices on them will not result in sales uplifts adequate to compensate for the margin foregone. This intense pricing activity eased in the second quarter, and the whole sector benefited from an exceptional summer.

The prolonged period of good weather saw sales move into higher margin fresh, premium and beverage lines. The good weather continued through much of October, when the usual competitive promotional activity ahead of Christmas got under way. Trading in the weeks leading to Christmas appeared to be slow for most retailers, with trade coming in a late surge in the final week. An important, and encouraging, feature of the year was the increasing focus by consumers, the media and the industry on health, quality, freshness and the provenance of food. This was a shift away from merely focusing on price, the main area of attention in the previous five years (Fishman, 2006, 60). A combination of factors has contributed to this, including great consumer interest in food and drink programmes on television and a national debate emerging over obesity concerns.

Operating Overview

Morrison's first year operating as a truly national retailer, under one brand, with common systems and processes. Whilst, inevitably, there was some residual activity dealing with legacy Safeway issues, most of management's attention was on delivering Morrison's best practice through the enlarged stores estate and on recovering profitability. Company's targets in this regard were laid out in the Optimisation Plan, published in March 2006, and all of these were achieved. Company opened 4 new, large stores in the year, in Leyland, Swadlincote, Cardiff and Crowborough, and ...