Morrisons warns on sales and profits as owners kick off GBP 500 million property sale

  • Morrisons owners warned that sales and profits could be impacted by both inflation and the war in Ukraine after its first quarter profits dipped
  • The supermarket’s new owners have kicked off a sale of grocer’s GBP 500 million property portfolio

By guest author Sahar Nazir from Retail Gazette

Caption courtesy by Retail Gazette


Morrisons warned that sales and profits this year could be impacted by inflation and the war in Ukraine.

The UK’s fourth largest supermarket chain said “developments in the geopolitical environment” and “ongoing and increasing inflationary pressure” since the beginning of February were hitting consumer sentiment and spending.

It said it was difficult to predict how long the problems would last, and that unless conditions improved, it could face a “material adverse effect” on sales and earnings for the year.

The supermarket had already seen a fall in earnings for the three months to 30 January.Morrisons said underlying quarterly profits had plunged almost 10% to £316m.

Meanwhile, CD&R, Morrisons new owners, has given approval for plans to sell a £500 million property portfolio months after completing their £7 billion takeover of the grocer.

The supermarket is seeking to appoint advisers to oversee the disposal of a substantial amount of its manufacturing and distribution facilities across the UK.

The real estate auction will be among the most significant moves to date sanctioned by CD&R.

The plans had been under discussion for some time, with a formal process expected to begin soon.

The buyout firm won a takeover battle last autumn when it outbid a consortium led by Fortress Investment Group, a US-based rival.

“Bidco [the company formed by CD&R to implement the deal] recognises that the high proportion of freehold ownership of the Morrisons store estate is a particular strength of the business which has been carefully preserved over many years and will continue to be a cornerstone of Morrisons,” CD&R said.

“Bidco does not intend to engage in any material store sale and leaseback transactions.

“High levels of real estate ownership has been a feature of previous CD&R investments, including MFG where real estate ownership has remained above 90%, since the acquisition by CD&R in 2015.”

The undertakings given by CD&R, which did not incorporate manufacturing or logistics property assets, are binding for 12 months following the completion of the deal.