Morrisons share price: Supermarket group to close six convenience stores

on Nov 28, 2014
Listen, Friday, November 28: Wm Morrison Supermarkets (LON:MRW) is closing six convenience stores, just two months after saying it would scale back the expansion of its M local chain, according to media reports.
The Yorkshire Post yesterday reported that in the next few weeks, Britain’s fourth-largest grocer would shut its stores in Enfield in north London, Waltham Cross in Hertfordshire, Headington in Oxford and Kensington in west London. According to the Guardian, Morrisons also plans to close shops in Aberdeen and Kilmarnock in Scotland.
It is understood that the sites, opened less than two years ago, were leasehold and all affected staff will be moved to nearby stores. Reportedly, the Kensington store was not commercially viable, while the Enfield store’s lease had expired.
A Morrisons spokesman was quoted by The Yorkshire Post as saying: “Just like other retailers, we modify our estate based on an evaluation of properties, their remaining lease and whether they remain commercially viable. Our target for convenience store openings is unchanged.”
The closures come after months of speculation that Morrisons would be forced to shut a number of underperforming stores that had been too hastily snapped up in a rapid expansion plan.

Roger Owen, the former long-serving property director of Morrisons and a critic of the senior management team led by CEO Dalton Philips, has questioned the rationale behind the group’s decisions. He was quoted by the Yorkshire Post as saying that location was everything in retail and suggested that Morrisons had gone into the stores last year at “goodness knows what cost” just to get floor space. “They are now starting to reap what they sow,” Owen added.

Last year, Morrisons bought parcels of former Jessops, HMV and Blockbuster outlets from administrators after those stores went bust, in a bid to enter the fast-growing convenience store market. The chain, significantly smaller than rival supermarket groups Tesco (LON:TSCO) and Sainsbury’s (LON:SBRY), aimed to tackle its lack of exposure to the sector, planning to open 100 M locals a year. However, in September it admitted it would only be able to open between 60 and 70 this year as it had pulled out of a planned deal to buy a large parcel of stores. Morrisons said at the time that it maintained ‘ambitious future growth targets’ for M local and that in future years it still intended to open up to 100 new stores a year.
**Analysts on Morrisons share price**
Morrisons’ shares have been trading in negative territory so far today. As of 14:34 GMT, the stock was changing hands at 176.80p – 0.63 percent down intraday. In the year to date, the supermarket chain has plunged almost 33 percent.
Of the 18 analysts projecting 12 month price targets for the FTSE 100-listed supermarket chain for the Financial Times, the median target is 185.00p, with a high estimate of 330.00p and a low of 135.00p.
According to the FT, as of 22 November 2014, the consensus forecast amongst 46 polled investment analysts covering Morrisons has it that investors should hold their position in the company.

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