,
Lancashire .]]
() is the
Fourth Largest chain of
Supermarket s in the
United Kingdom . The company is usually referred to as ''Morrisons'' and it is part of the
FTSE 100 Index of companies.
Morrisons was founded by
William Morrison in
1899 , initially as an egg and butter merchant in
Bradford, England . His son
Sir Ken Morrison is now executive chairman of the company.
From the early 1900s the company used the name . Sir Ken took over the company in 1952, aged 21. In
1958 it opened a small shop in the town centre, followed by its first supermarket "Victoria", in
1961 . In
1967 it became a public company listed on the
London Stock Exchange .
As of
March 2006 Morrisons has 355 superstores in the
United Kingdom , including those it has retained following its purchase of
Safeway (see below). Until 2004, Morrisons superstores were largely concentrated in the English
Midlands and the north of
England , but had expanded southwards, beginning with a store at
Erith ,
Kent , which opened in 1998
{Link without Title} . Most Morrisons stores operate from large superstore formats selling a wide range of products including the core groceries.
Morrisons is now one of just four supermarket chains that dominate the full-size superstore market in the United Kingdom. In descending order of size the other three are sector; and Tesco and ASDA place great emphasis on their non-food ranges and are experimenting with stand alone non-food stores.
The Morrison family currently own around 18% of the company, compared to the 30% they owned before buying Safeway plc in March 2004.
Some analysts have expressed concern that Morrisons value-focused marketing may not be as successful in affluent parts of
Southern England , as they are in the company's traditional
Northern heartlands. At the 2005 annual results briefing, Sir Ken Morrison informed investors, "I don't know what a ''middle class shopper'' is." The
City was becoming impatient with Morrisons
Corporate Governance , especially its lack of non-executive board directors.
In January 2006, Morrisons announced that sales at former Safeway stores were up 9% in the last six weeks of 2005, with sales at the core Morrisons estate down by 0.7%. The overall figure was a sales rise of 2.8%. The company also announced a £60 million one-off charge for the closure of former Safeway depots in Kent and Bristol with the loss of 2,000 jobs.
In March 2006, Morrisons announced that sales at its 378 stores trading in the first 7 weeks of its new financial year were up 3.2%. However, Morrisons currently trades from 362 stores.
On
8 March ,
2004 the takeover by Morrisons of Safeway plc was completed (See the
Safeway entry for full details of this deal). Stores under the Safeway brand were concentrated in the south of England and
Scotland , thus giving Morrisons a nationwide presence for the first time. Morrisons proceeded to rebrand the supermarkets under its own name and the convenience stores were initially rebranded as "Safeway Compact". Most larger Safeway stores were converted to the Morrisons ''Market Street'' format, while 55 others were sold off to rival chains to fulfil
Competition Commission takeover conditions.
Morrisons later sold 114 smaller ''Safeway Compact'' stores to
Somerfield and a further 20 larger stores to other companies, closing nine that were unsuitable for sale or conversion. The programme of conversions was the largest of its kind in British retail history. In total, 241 stores were eventually sold off, either due to stipulations by the Competition Commission, or to size and location. (See below for further details).
The retained stores were predominantly those over 25,000 sq ft with separate car parks. Within a few weeks, Safeway carrier bags were replaced by those of Morrisons and the new owner's brand name products began to appear in Safeway stores. The best parts of the Safeway own-brand offer, such as "The Best" range of high quality foods, and "Eat Smart" range of healthy foods, were adopted across the Morrisons chain, along with many former Safeway products. 'The Best' range offers a wide variety of more upmarket products (food or otherwise) which are available in all stores. These own-brands go alongside the original Morrisons store brands such as ''Bettabuy'', Morrisons' range of economy products.
In July 2004, Morrisons shocked the stock market with its first ever profits warning, largely caused by falling sales at Safeway stores. It emerged that Safeway had changed its accounting system just three weeks before the takeover and inflated its books by taking early bonus payments from suppliers, thus creating a deficit in excess of £180 million when the Morrisons accounting system was applied. New stores being converted, however, show sales up more than 20 percent under the Morrisons fascia.
By May 2005, Morrisons had issued five profit warnings since its takeover of Safeway. Sir Ken stood down as chairman of the operational board, but remained executive chairman of the main board. In July 2005, Morrisons released figures that suggested it may have turned the corner, with a 14% sales increase in converted Safeway stores. The last Safeway stores were converted by
24 November 2005 , when the Safeway brand disappeared from the UK.
{Link without Title}
Originally 52 stores were to be compulsorily divested after the takeover, but this was reduced to 50 after one Safeway store in
Sunderland was burned down and the lease ended on another in
Leeds city centre.
John Lewis Partnership purchased 19 to be part of its
Waitrose chain, while
J Sainsbury Plc purchased a further 14, and Tesco bought 10 in
October 2004 .
In late 2004 it was announced that the 114 smaller 'Safeway Compact' stores were to be sold off to rival supermarket chain
Somerfield in a two- part deal worth in total £260.2 million. One of the main reasons was the Morrisons 'Market Street' store format, which is better suited to larger stores, while Somerfield is known more for smaller outlets. Also, Morrisons' senior management had realised that the challenge of integrating the larger stores would keep them fully occupied in the short term.
In
Northern Ireland all of the Safeway stores were sold off, most of them to
Asda . This included a store in
Bangor which actually opened after the Morrisons takeover.
Morrisons continued to sell and close stores not covered by the Competition Commission ruling which it felt did not fit with the scale and layout of its
Market Street format. In total, 241 stores were sold off by
November 2005 , leaving the chain with 360. The largest single purchase was that of five stores by Waitrose, bringing the firm as far north as
Durham for the first time. Unlike other operators, most notably Tesco and Sainsbury's, Morrisons has chosen not to move into the
Convenience Store sector.
In May 2005, Morrisons announced the termination of Safeway's joint venture convenience store/petrol station format with
BP . Under the deal, the premises were split 50/50 between the two companies. Five sites were subsequently sold on to BP, while Morrisons sold the rest of its sites to
Somerfield and Tesco, which both maintain a presence in this market sector.
Morrisons also sold Safeway's Channel Island stores, in Guernsey and Jersey, to CI Traders. The Douglas store was sold to Shoprite, the Ramsey store was sold to the Co-op, but the Gibraltar store is no longer being marketed for sale.
The format of most Morrisons superstores is called Market Street. The meat is near or next to the butcher's counter, the
Delicatessen being traditionally named ''Provisions'' with cheese fridge nearby and rottisserie being named ''Oven Fresh''. There's a Pie Shop in every store and a bell rings when a fresh batch comes out of the oven. The overall theme is based on an early 20th century street setting.
Most Morrisons superstores are typically between 28,500 sq ft and 36,000 sq ft, with an increasing number above 36,000 sq ft, offering food, homewares, with some essential clothing (ie. socks, underwear), cafes and petrol stations. A number of Safeway stores that Morrisons decided to keep were between 15,000 sq ft and 25,000 sq ft. These are the 'Choice' format, stores which do not have shopfront-style counter facades, but simply signs proclaiming the name. Morrisons hopes to replace or expand these stores to make room for the full 'Market Street' format in the future.
The 'Rump' format are the same size as 'Choice' stores, but just carry the Morrisons outer logo signs, staff uniforms product lines and IT Systems, while otherwise remaining largely as they did before the takeover of Safeway. Certain items within the stores, such as checkout dividers, car park signs and some internal signage, have simply had the Morrisons logo stuck over the Safeway logo and can still clearly be identified as ''Safeway'', whereas all evidence of the old brand has been removed from most stores. These stores are earmarked for divestment or replacement in the very near future.
All three formats trade simply as Morrisons.
Morrisons products are primarily marketed under two slogans, ''"More reasons to shop at Morrisons"'' and ''"The very best for less"''. The ''more reasons'' campaign is backed up with separate adverts explaining numbered "reasons". There are usually a large range of
Special Offer s in each store. The company is perceived to trade towards the lower end of the mainstream supermarket sector, offering value above choice and premium quality.
With the conversion of Safeway complete, Morrisons is now faced with the need to rebuild its credibility in the city and re-establish the core strengths of the brand.
As of
February 2006 , the company's share price has risen above 200 pence and there is a feeling among analysts
{Link without Title} that the corner has been turned since completion of the Safeway conversion programme.
In March 2006, Morrisons launched a three- year 'Optimisation Plan' aimed at cutting costs to ensure future profit recovery. This includes £60m worth of cost savings in distribution and support functions, as well as adapting the smaller 'Choice' format stores below 25,000 sq ft, representing 40% of the store estate, to fit with local demographic and cultures. The 'Health & Beauty' range is also being re- launched. The search for a new southern RDC is underway.
Morrisons decided not to make any more staff redundant, seeing as it has already removed 20-30,000 staff from its payroll due to integration and store disposals. Instead, it is opting for time- saving initiatives.
Integration costs in 05/06 were £374.9m, leading Morrisons to report a loss of (£312.9m). A pre-tax profit of £61.5m is an 81% drop on the £332.2m the company made in 2004-05.
Sales rose 3.2% in the first 7 weeks of Morrisons financial year, at the then 378 trading stores. (Now 362 stores).
It also announced its new Head Office, in Gain Lane, Bradford, Yorkshire, is due to open in June 2006.
During
2006 , Morrisons is expected to appoint a new chief executive to replace
Bob Stott and nominate an eventual successor to Sir Ken Morrison.
| 52/3 weeks to | Turnover (£'m) | Profit before tax (£'m) | Profit/(loss) after tax (£'m)
|
|---|
| 29 Jan 2006 | 12,115 | 061.5 | (312.9)
|
| 30 Jan 2005 | 12,116 | 297.1 | 205.7
|
| 1 Feb 2004 | 4,944 | 319.9 | 197.6
|
| 2 Feb 2003 | 4,290 | 282.5 | 186.3
|
| 3 Feb 2002 | 3,915 | 243.0 | 143.7
|
| 4 Feb 2001 | 3,496 | 219.1 | 120.0
|
| 29 Jan 2000 | 2,969 | 189.2 | 103.1
|
