Morrisons first-half hit by Covid-19 safety costs

Half-year profits at supermarket chain Morrisons fell by a quarter as Covid-19 costs offset a rise in like-for-like sales.

The company on Thursday reported underlying pre-tax profits of £148m, down 25.3%. Like-for-like sales, excluding fuel rose 8.7%. Lower fuel sales, as drivers stayed home during the coronavirus lockdown, hit revenues, which fell 1.1% to £8.73bn.

The company deferred its special dividend, but lifted its interim payout by 5.7% to 2.04p a share.

Second quarter group like-for-like sales excluding fuel rose 12.3%, compared with a 5.7% increase in the first quarter.

Costs related to implementing Covid safety measures cost £155m, with £93m in business rates relief tax lowering net costs to £62m.

"We are confident of continued strong momentum into the second half, improved free cash flow and net debt, and another year of profit growth," Morrisons said.

The chain also confirmed reports overnight that it had hired an extra 45,000 staff to cope with demand as the pandemic sparked panic buying as customers stripped stored of essentials such as toilet roll before the lockdown was implemented in late March.

"The mix of the very strong first-half sales growth was weighted towards online channels and lower margin categories. In addition, fuel sales growth was very negative, our cafes were temporarily closed, and we invested in supporting our colleagues, NHS workers and farmers with extra discounts."