Supermarket slashes expenditure as it unveils 拢800m 2014 loss

Supermarket giant Morrisons is to slash its construction programme even further following the announcement it fell to an 拢800m loss for the year to February 2015.

The firm said capital expenditure for the current year would fall by around a quarter, from 拢520m to 拢400m, with a big slowdown in the planned opening of new convenience stores, and a continuation of its policy of only opening new major stores 鈥渋n exceptional circumstances.鈥� This is further to the dramatic fall in capital spend last year, when it fell by more than 50% from almost 拢1.1bn.

The overall loss was partly caused by a massive 拢1.3bn write-down due to the falling value of its property assets, and partly caused by an underlying drop in pre-tax profitability of 52%, to 拢345m.

The firm said: 鈥淒uring 2015/16, we expect capital expenditure to fall further to around 拢400m.

鈥淭his will comprise fewer new convenience store openings than initially planned, with more capital allocated to maintaining and updating the core estate. As announced, in future we will only add new core supermarkets to the space pipeline in exceptional circumstances.鈥�

Phil Dorrell, director of retail consultant, , said: 鈥淭he brand has haemorrhaged both sales and share to the brash young discounters who took its cheap prices USP, improved it, and then unceremoniously yanked the rug from underneath it. Next to the perky German upstarts it has increasingly looked neither cheap nor cheerful.鈥�

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