A surge in sales of local foods such as Plumgarth sausages and Voakes pies helped Morrisons fight off competition from the discounters and deliver a 17% rise in profits.
The UK’s fourth largest supermarket chain said it was paying a 4p a share special dividend on top of its 4.43p final dividend as underlying pretax profits rose 11% to £374m in the year to 4 February.
Morrisons said sales of local suppliers’ foods had risen 50% in the past two years after signing deals with more than 200 farmers and other local food producers and tailoring stores to regional tastes.
Wholesale deals with Amazon and the McColl’s convenience store chain as well as the development of small late-opening shops on its own supermarket petrol forecourts, and expanding its premium own label The Best also helped drive a 5.8% rise in total sales in the year to £17.3bn. Sales at established stores, excluding fuel, rose 2.8%.
Chief executive David Potts said the company was making “good progress” with a “colleague-led turnaround and becoming more competitive for customers.”
He said Morrisons had new avenues for growth as it extended its wholesale business and looked to open three new stores in the year ahead, the first in two years.
Morrisons is already supplying goods to some McColl’s stores as well as 40 petrol forecourts run by Rontec. It is now adding 25 McColl’s stores a week and will be supplying about 40 stores in the Channel Islands run by Sandpiper CI. Morrisons has revived its Safeway brand for wholesale and Potts said it was now “open for business” looking for new retail partners. The group expects to achieve £700m of wholesale sales by the end of this year as it extends its partnership with Amazon and McColl’s, aiming for sales of more than £1bn.
Morrisons has cut management roles, closed stores and been forced to keep prices low amid aggressive competition from Aldi and Lidl as well as a switch to shopping online and in small local stores.