The turnaround at Wm Morrison Supermarkets (LON:MRW) is becoming more tangible, but there are still challenges ahead, analysts at Hargreaves Lansdown have said. The comments came as the British grocer posted its best annual results in five years yesterday, but warned of ‘uncertainties ahead’.
Morrisons’ share price tumbled in the previous session following the results, shedding 6.56 percent to close at 230.80p, and underperforming the benchmark FTSE 100 index which lost 19.65 points to end the session 0.27 percent lower at 7,314.96. The grocer’s shares have gained more than 10 percent over the past year, but have been little changed in the year-to-date.
Citywire quoted Hargreaves Lansdown analyst George Salmon as commenting yesterday that following “years in the doldrums, the turnaround is becoming more tangible at Morrisons,” with the grocer having delivered increases in both like-for-like sales and profit before tax for the first time since 2012.
“What is notable is the more conservative outlook, which highlights the continued challenges facing the business, particularly from the higher cost of imports following sterling’s fall,” he pointed out, adding that while the company’s freehold portfolio gave it the tools to reduce debt and “continue improving the customer experience,” he also got “the feeling the headwinds facing the sector will be blowing strongly for some time yet”.
Paul Thomas, senior consultant at Retail Remedy, meanwhile has been more upbeat on Morrisons’ prospects.
“With a strong set of results like this, we could expect an air of arrogance, but instead we have an air of confidence,” he pointed out, as quoted by City A.M. “Yes, there is work to do and yes, the sands can shift again, but Morrisons are firmly focussed on the customer and with that comes results.”