Morrisons bounceback continues as it notches up higher sales and profits

Supermarket Morrisons has cheered another "strong" year after ringing up a hike in annual sales and profits as its turnaround gathers pace.

The Bradford-based chain posted a 16.9% leap in bottom line profits to £380 million for the year to February 4.

On an underlying and comparative 52-week basis, pre-tax profits rose 9.5% to £374 million.

The profit leap comes after group like-for-like sales lifted 2.8% over the year, including a 2.3% rise online and in its supermarkets.

Group sales growth stood at 2.6% in its fourth quarter, against 2.8% in the previous three months, including 2% growth online and in supermarkets.

It marks the group's ninth quarter in a row of rising sales.

Chief executive David Potts said: "We have made good progress in our turnaround."

But he added the market remains "very competitive" and said the group would continue to prioritise offering customers "value for money".

The group also cheered investors with a 4p a share special dividend payout, seeing the total full year divi nearly double to 10.09p a share.

Morrisons said it saw more transactions - up 2% in the fourth quarter - but with shoppers buying 3.7% fewer items.

Mr Potts said inflation, which had soared in 2017 due to the Brexit-hit pound, had "tapered" off and would continue to ease back in 2018.

But he said the group had held off hiking prices to remain competitive.

"The priority is becoming more competitive and looking through that (inflation) as we have to be more competitive to continue with the recovery of the firm," he said.

Supermarkets across the board have had to increase shop prices as costs have risen since the pound's collapse following the Brexit vote.

While moderate inflation can help supermarkets boost their sales and profit margins, it also poses a risk as it results in diminished consumer spending power.

But Morrisons has been among the strongest performers compared with its peers over the past 12 months as its bounceback under Mr Potts has borne fruit.

Over Christmas, Morrisons was a stand-out performer among the so-called Big Four thanks to surging sales of its premium range and efforts to keep a lid on prices.

But Morrisons has not been immune from market pressures as the Big Four remain locked in a battle with German discounters Aldi and Lidl.

Earlier this year Morrisons axed 1,500 shop floor workers as part of a
restructure that will see more customer service staff and fewer managers.

It followed similar cost-cutting drives from Tesco, Sainsbury's and Asda.

Morrisons said in its results that there was still a "substantial cost-saving opportunity" as it simplified the group, which it pledged to put back into improving service for shoppers.