Morrisons share price: Rivals may follow grocer with job cuts

on Jun 19, 2014
Updated: Apr 9, 2020
Listen, Thursday, June 19: Wm. Morrison Supermarkets’ (LON:MRW) decision to reduce its store management staff may be followed by similar moves by industry rivals, according to broker Shore Capital.

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On Wednesday, the UK’s fourth-largest supermarket chain confirmed it is to axe 2,600 jobs as part of its plans to reorganise and simplify the group’s management structure (Morrisons share price rises as grocer confirms management overhaul plans).

The move came after a period of tough trading for Britain’s ‘big four’ grocers — which also include market leader Tesco (LON:TSCO), Wal-Mart-owned Asda and Sainsbury’s (LON:SBRY) – in which they lost market share to rivals such as discount retailers Aldi and Lidl.
Morrisons’ job reduction initiative followed on from Asda, which announced in April that it was placing 4,100 store managers on consultation, with a view to a material reduction in headcount.

“Morrisons’ initiative on labour costs is not the first within the supermarket industry and, we believe, it will not be the last.” Shore Capital analysts Clive Black and Darren Shirley said in a note to investors yesterday.
They added: “Whilst in no way seeking to be a destabilising force elsewhere, we believe that Sainsbury’s and Tesco will also announce in due course material productivity programmes involving labour shedding. Indeed, in a market suffering sustained weak demand and gross margin pressure, cutting the cost cloth accordingly is the key lever available to management to support margins and profits.”

None of the cited retailers has commented on the broker’s statement.
**Morrisons sells distribution centre for almost £100m**

In a separate development, Morrisons announced today that it had sold a major distribution centre to Tritax Big Box for £97.8 million. The depot in Sittingbourne, Kent will be immediately leased back to the supermarket chain on a 25-year agreement at an annual rent of £5.4 million a year. The disposal is in line with Morrisons’ plan to monetise about £1 billion of its property estate by 2016/17.

Group property director Terry Hartwel commented on the deal: “In addition to being one of the country’s leading grocers and food producers, Morrisons is also the owner of a significant amount of real estate in the UK. As highlighted in our latest preliminary results [ Morrisons share price: Company swings to £176 million annual loss], one of our objectives is to manage our properties more actively than we have historically which involves monetising a small number of assets including our Regional Distribution Centre in Sittingbourne.”
**Stock movements**
Morrisons’ share price has been trading in positive territory so far today. By 10:18 BST, the stock had risen 1.26 percent to 193.30p. Meanwhile, Tesco had climbed 0.50 percent to 293.55p, while Sainsbury’s had advanced 1.20 percent to 320.90p.
**As of 10:11 BST, buy Morrisons shares at 193.30p.**
**As of 10:11 BST, sell Morrisons shares at 193.10p.**
**As of 10:11 BST, buy Tesco shares at 293.85p.**
**As of 10:11 BST, sell Tesco shares at 293.65p.**
**As of 10:11 BST, buy Sainsbury’s shares at 321.00p.**
**As of 10:11 BST, sell Sainsbury’s shares at 320.80p.**


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