Morrisons to cut dividend and post lowest profit in eight years
Morrisons is expected to signal lower dividend payouts on Thursday this week when the troubled supermarket chain is to report its lowest annual profit in eight years.
The Bradford-based retailer has been hit hard by the fierce industry price war as all big four supermarkets battle it out to retain customers’ loyalty and fend off competition from the discounters.
The group last week announced that former Tesco executive David Potts would join as its new chief executive on 16 March, succeeding Dalton Philips, who was ousted in January after failing to revive the retailers’ performance during his five years at the helm.
The firm, which will report its results for the year to the end of January on Thursday, has guided to a pre-tax profit before one off items of £335m-£365m, while analysts’ average forecast is £342m. That’s less than half the £785m made in 2013-14 and a third straight year of decline.
Morrisons had pledged to raise its 2014-15 dividend to not less than 13.65p, up five per cent.
However, analysts reckon the firm will flag a reduced payout for the current year. Morrisons’ joint broker Jefferies is forecasting a dividend of 7.61p for 2015-16.
The savings could be invested in further price reductions.
Morrisons announced at the time of its full-year results last year that it would spend £1bn on price cuts over three years to stem the loss of shoppers to the discounters Aldi and Lidl.
New chairman Andy Higginson has said the group will continue to stand by the plan. However, he has also pledged to focus on its existing supermarkets and is expected to announce a slowdown in openings of convenience stores.