AJ Bell argues that while Wm Morrison Supermarkets (LON:MRW) is doing ‘a very good job’ of growing earnings in a competitive market, there are questions over how long the trend can persists, Citywire reports. The comments came after the blue-chip grocer updated investors on its interim performance yesterday, posting a rise in profits, having benefitted from this summer’s warm weather spell across the UK, as well as the World Cup championship.
The grocer’s results, however, failed to entice investors and instead sent Morrisons’ share price tumbling 2.09 percent lower to 260.25p in the previous session. The supermarket’s shares have added just under eight percent to their value over the past year,
Morrisons faces pressure
Citywire quoted AJ Bell analyst Russ Mould as commenting that Morrisons’ business was ‘on a roll’ while questioning how long its run could last, especially given that the planned merger of Sainsbury’s (LON:SBRY) and Asda would weaken its position.
“Latest figures from Kantar Worldpanel show that Morrisons has a 10.4-percent market share, bigger than Aldi and Lidl but much less than Tesco, Sainsbury’s and Asda,” the analyst pointed out.
Other analysts weight in
The BBC meanwhile quoted Richard Hunter at Interactive Investor as commenting that Morrisons had delivered more positives than negatives. The analyst, however, also pointed to Sainsbury’s upcoming merger with Asda, arguing that it “will heap additional pressure on an already fiercely competitive sector”.
The newswire also quoted Bryan Roberts at TCC Global as pointing out that while praise was due for Morrisons’ “underappreciated wholesale activities via Amazon and McColl’s […] we have been deeply impressed with recent store visits, convincing us that the retailer is achieving genuine unique selling points in an otherwise largely homogenised market”.