Morrisons 'to raid property stock'

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File photo dated 09/05/13 of Morrisons supermarket trolleys as Morrisons is reported to be planning an ?800 million raid on its property empire as it looks to buy time from the City after a poor Christmas. PRESS ASSOCIATION Photo. Issue date: Sunday January 12, 2014. See PA story CITY Morrisons. Photo credit should read: Joe Giddens/PA Wire

Morrisons is reported to be planning an £800 million raid on its property empire as it looks to buy time from the City after a poor Christmas.

The supermarket, which last week revealed a worse-than-expected 5.6% decline in sales, is set to return some of the cash pile to shareholders through dividends or share buy-backs, the Sunday Times said.

Morrisons' property empire is valued at £9 billion but as 90% is freehold owned - higher than the industry norm of 60% - there is room for the chain to sell some stores and lease them back, possibly raising £800 million.

Its coffers could also be swelled by a reduction in capital spending from £1.2 billion to £650 million a year as the industry's space race slows down.

Chief executive Dalton Philips is putting the finishing touches to a review of the retailer's balance sheet, with the outcome due in March. An increase in returns to shareholders would buy time as he works to get the company back on track.

Morrisons has suffered in recent years from its under-exposure in the fast-growing areas of convenience stores and online. However on Friday it started internet grocery deliveries under a tie-up with Ocado and is expected to have 100 of its smaller format stores by the end of this month.

It warned last week that profits will be at the bottom end of City expectations after a Christmas in which consumers managed their budgets "very tightly and were shopping across a range of formats and retailers."

The performance, which Mr Philips described as disappointing, comes as the big-four grocery chains find themselves increasingly squeezed by discounters rivals Aldi and Lidl and Waitrose at the premium end of the market.

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