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Grocery Guru Episode #28: Morrison’s Q1 Trading Statement and Their Wholesale Performance
Join Andrew Grant and Darren A. Smith in the twenty-eighth episode about Morrisons Q1 trading statement for 2021 (14 weeks to 9 May 2021) – ‘On track for strong future profit growth and low debt’. Their partnership with Amazon, predicting the new working patterns, and strong wholesale performance.
You Can Read the Full Morrisons Q1 Trading Statement Episode Transcript Below:
Darren A. Smith:
Welcome to the Grocery Guru. This is episode 28 and we are here with your grocery guru, Andrew Grant. Andrew, how are you doing?
Andrew Grant:
Morning, Darren. Yes, very well. Thank you.
Darren A. Smith:
Good. You’re sporting a hoodie today.
Andrew Grant:
Yeah, it’s still early in the morning.
Darren A. Smith:
Fair enough. All right, let’s talk about Morrison’s quarterly statement. I think is what’s in our postbag today.
Andrew Grant:
Well, that was the news that sort of sparked some thoughts, I guess. Morrison’s 12 week trading statement came out, I think Tuesday. Always really, really useful because, we’ve talked about the annual results of all of the big four. The only problem with those are they’re up to a year out of date, whereas this is only 12 weeks out of date. So it’s a real snapshot of what’s happening out there. I think I’ve said it before, I’m really glad I am not facing some of the conundrums these supermarkets are facing, because what struck out to me, it’s a good performance, they’re now lapping the start of the pandemic.
Darren A. Smith:
Yeah.
Andrew Grant:
So they’re lapping all that bulk buying of toilet rolls and water and all the panic buying. They’re like for like.
Andrew Grant:
Yeah. Their like for like’s down to 1.6%. Down from a peak of 11.1. But the good news for them is on a two year basis, their like for likes are up 8.7. Now a lot of that’s driven by their wholesale business, which is growing like Topsy. But what stood out for me, is they put a couple of graphs into the trading statement. Their fuel volumes are back to pre-pandemic levels.
Darren A. Smith:
Okay.
Andrew Grant:
Their three pound meal deal, their food to go offering, is ahead of pre-pandemic levels. We read all this stuff about, the new normal is working from home, town centers are going to be dead, but on the face of it, these figures… And just anecdotally, when you go on the roads at the moment, the rush hour is back.
Darren A. Smith:
Yeah.
Andrew Grant:
The M-25 is gridlock at 4:30 every day. So, is everybody back at work or the flip? And you probably noticed it, Pret a Manger opening sandwich shops in Tesco supermarkets, because their high street business has been destroyed. Who was right?
Darren A. Smith:
It’s a real tough one. There might be a third scenario in this, which is we all go back to work type thing to normal for a couple of months because we’re desperate to get to see people, engage, and go back to where we work to feel like normal people. Then we decided actually that thing, that home wasn’t so bad and we do this for a bit until we figure out, we need to balance that maybe is somewhere here in the middle.
Andrew Grant:
Or you become a twat.
Darren A. Smith:
Go on, tell us what the twat is.
Andrew Grant:
It’s nothing personal, Darren. It is a proper scientific term. It is not a swear word. A twat is somebody who works in the office Tuesday, Wednesday, and Thursday.
Darren A. Smith:
Okay.
Andrew Grant:
I think this is what the new normal will be. They say there’s a million, again, another piece of news this week, they surveyed the UK’s 50 largest employers. Over a million workers will be allowed to work in a hybrid home or office scenario. I think some of the banks have already said it, some of the big investment houses in London. When you look at what’s happening with home purchases, Devon and Cornwall, the cop was just manic, manic, house buying. I think you’re going to see the rise of the twat, the person that works in the office Tuesday, Wednesday, and Thursday, but then enjoys a much more relaxed, country style way of life Friday, Saturday, Sunday, Monday.
Darren A. Smith:
It’s the long weekend, and maybe the biggest positive to come out of the awful COVID pandemic, is that we were playing with flexible working before. Maybe now we’re actually going to do it properly. There’s the talk of the four-day week, of course. Maybe this is the bit that’s in the middle that really works, where someone works mostly in the office and then they have the long weekend at home.
Andrew Grant:
Well, I think it breaks the big taboo. I’m sure you would have known it, but whether it was at Salisbury’s or Tesco, if you said to your boss, “I’m just going store visiting”, everybody knew you were skiving off the afternoon.
Darren A. Smith:
Yes.
Andrew Grant:
You had that awkward thing the next morning when they said, “Oh, which stores did you visit”? “Oh, yeah. That one in New Olden”. “We haven’t got a store in New Olden, Andrew”. “Oh, right. It was somewhere else then”.
Darren A. Smith:
Maybe that’s what COVID has brought, the positive is that we’ve found this way of working, which is beyond the jolly, which it used to be. I’ll have a jolly day off from a Friday. To actually, people are realizing, when I’m at home and I’ve got Teams, I’m doing that, I’m working hard, I’m working hard at the office, and the balance is struck.
Andrew Grant:
Certainly, anecdotally, among friends and colleagues, they don’t want to work from home 24/7. They just get too fed up of their other half, all the distractions. But equally, they do not want the hassle of having to get a train into London every day and have that stress and congestion. For them, hybrid is perfect. Everybody I speak to, “Yeah. I’ll quite happily go in the office two or three days a week, because it gets me out of the house. I get to meet my colleagues and a bit of, you know, social interaction. It’s also good for business. But do you know what? I do value being able to spend more quality time at home where actually I feel I’m more productive when I’m working”.
Darren A. Smith:
Yes. I’m just going to drop in here a help for anyone who’s viewing. We’ve just written an article called, Turn Off Your Email Notifications, Watch out for the Badges. I’m just going to intrigue people with that and we’ll drop the link at the bottom of the video. The other part is, try not to build your calendar like Titres, where you drop down those things and all of a sudden you’ve got 12 hours absolutely stacked back to back and you think, “Oh, that’s a hell of a day”. Try not to do that. But again, we’ll drop some links on the video to help them.
Andrew Grant:
Mm-hmm (affirmative).
Darren A. Smith:
All right.
Andrew Grant:
Yeah. As ever, interesting times and some real big calls some of these retailers got to make. Although, when I say big calls, they’ll make the calls, but it’s the supply base that’ll have to either jump to attention instantly, if suddenly food to go takes off again, or they’ll be left on the sidelines if they decide now food to go isn’t the future. I think for the suppliers, they need to be absolutely eagle-eyed and watch every single second of all these various stats and trends we’ve been talking about, because I couldn’t call it. I don’t think it’s 50, 50 as to whether hybrid working will be here to stay or in three years time we go pandemic? What pandemic?
Darren A. Smith:
Yeah. It could be. It’s a tough one to call, you’re right. The obvious answer is they need to be flexible, which they’re watching this thinking, “Of course we need to be flexible. We need to have a business plan for either. Of course we do”. We appreciate that it takes a huge amount of effort to create something that you might never use.
Andrew Grant:
Yeah, absolutely.
Darren A. Smith:
Called out another two highlights before we finish and let you go. Online sales also continue their strong run with year on year growth of 113%, partly driven by it’s partnership with Amazon.
Andrew Grant:
Yeah. Yeah. That is something that is clearly here to stay. People have switched into the convenience of having their bulk groceries home delivered. I think I said in an earlier one of these, it is quite staggering that the supermarkets managed to train the UK population to do their own picking and sorting effectively in a warehouse.
Darren A. Smith:
We’re actually very good pickers. Very good pickers.
Andrew Grant:
If you’d have pitched that as a business plan today, we’d like our customers to go and pick and sort their own products and move them from shelf to trolley, trolley to belts, belts to trolley, trolley to car. They’d say that you wouldn’t get investment for that.
Darren A. Smith:
Very true. Very true. One last bit re primarily starting to supply an extra 230 McConnell stores, 25 McConnell stores converted to Morrison Daily, taking a total of 56. We’ve got 56 months Morrison Daily’s out there now.
Andrew Grant:
Probably, to most people, Morrison’s wholesale business has been really an unsung hero. They’ve built a sizeable wholesale business there. Not quite what the plans for it would be. Would they at some point, float it off? Don’t know, but they’ve managed to keep a focus on running a pretty good set of supermarkets, but also build this pretty sizeable now wholesale business. Which obviously helps their volumes and helps them in their negotiations with the biggest suppliers because, they don’t have the buying power of a Tesco or Salisbury’s or an Asa, but actually with the wholesale division, gives them a lot of extra oomph when it comes to the negotiations.
Darren A. Smith:
Certainly does, but it doesn’t touch on their manufacturing division. In the bits that I read.
Andrew Grant:
No it doesn’t, but I guess that’s another unique part of the Morrison set up. I can’t remember whether the vertical integration is in vogue or isn’t in vogue, it seems to switch in and out, but they’ve got a pretty successful vertically integrated model as the textbooks would say.
Darren A. Smith:
Andrew, great insights. What’s the one takeaway you want to leave our viewers with?
Andrew Grant:
Oh, the one takeaway? Three pound meal deal sounds good.
Darren A. Smith:
I like your work. Okay. Andrew, thank you very much. We’ll see you next week.
Andrew Grant:
Bye-bye.
Darren A. Smith:
Bye.
Take a look at the Morrisons Q1 Trading Statement video on our YouTube Channel. Also, check out our award-winning blog.
