Morrison has not had a happy year, but after the costs of acquiring and integrating Safeway led to its first ever annual loss, the company is now determined to revive the business. It posted a £312.9 million loss for the year, after costs of almost £375m for the deal to buy Safeway.
Sir Ken Morrison, outgoing chairman, called it “an extremely challenging year for Morrison. However, through this period of great change, we have built strong foundations for the company’s future as a national retailer.”
It has announced a three-year Optimisation Plan, which it hopes will allow the larger business to fix its basic problems. The plan includes reducing distribution costs by £30m and central operating costs by the same amount. The UK’s fourth largest supermarket also has plans to save £50m this year on staff costs. “The Optimisation Plan lays out the steps we need to take over the next three years to enable the company to apply and adapt where necessary the original Morrison model to the new, larger business. I am confident that the plan will quickly deliver significant improvements in performance,” said Morrison.
The company has 378 stores and 275 filling stations, and the store conversion process and systems integration from the merger is now complete. It has moved into its new head office in Bradford and finished the installation of its new accounting system. The company anticipates cost savings of around £30m by not running dual systems and from reductions in its support costs. Last year the IT team concentrated on getting Safeway’s PeopleSoft and Unipay HR and payroll systems running effectively for the whole company. It was working on the infrastructure and transferring applications to the new HQ.
Morrison has also tackled its distribution, closing three depots that were no longer needed after the merger. It is now looking at supply chain and logistics systems for transport and warehousing that it hopes will deliver business benefits next year.
Morrison says its current plans are tactical and aimed at reducing costs and further integrating the two stores’ operations. The current CEO Bob Stott has deferred his retirement until next year and the company is awaiting the arrival of a new CEO before outlining a longer-term strategy.