Morrisons recovery continues as sales and profits rise

Morrisons has reported rising sales and profits, indicating that the recovery at the UK's fourth largest supermarket chain is continuing.

Profits rose 13.5% to £143m for the six months to 31 July, the first increase in half-year profits for four years.

Like-for-like sales - which strip out the impact of new stores - rose 2% in the May-to-July quarter, the third straight quarter of growth.

Morrisons added it had seen "no negative impact" since the Brexit vote.

"It is too early to know how the recent referendum result could affect the British economy, but customers tell us their food shopping has not changed," it said.

'Real difference'

The grocery sector has seen a fierce competition as the big four supermarket chains - Tesco, Sainsbury's, Asda and Morrisons - have tried to fight off the threat posed to them by the rapid growth of discount chains Aldi and Lidl.

Morrisons' chief executive David Potts, who took charge of the chain in March 2015, has been attempting to revive the retailer's fortunes through measures such as price cuts and improving customer service.

"We have made improvements to the shopping trip for customers and we plan to do more," he said.

Morrisons chairman Andrew Higginson said: "The new team has made a real difference and delivered further good progress across the board in the first half."

As well as improving sales, Morrisons also said it expected to exceed its three-year cost savings target of £1bn by the end of 2016-17.

It has also cut its net debt by £477m to £1.27bn, which is below its full-year target of £1.4bn-£1.5bn.

Investors welcomed the latest results from Morrisons, pushing its share price up more than 7% in morning trading.

The shares have risen 40% this year and the company is now worth £4.8bn - only £400m less than Sainsbury's.

Neil Wilson, from ETX Capital, said: "Amid a struggling supermarket sector beset by cost pressures, these are very encouraging figures and a big boost for David Potts. His 'fix, rebuild and grow' strategy seems to be paying off well."

Nicholas Hyett, a Hargreaves Lansdown analyst, said Morrisons was "delivering one of the most impressive self help-fuelled turnarounds out there".

"The group is not so much taking a knife to its cost base as a meat cleaver," he said.

However, he added: "Morrisons is not completely out of the woods. Lower sterling will increase the costs of imported foods and how far the supermarket is able to pass that increase on to customers remains to be seen."