Morrisons defers dividend over coronavirus as profit rises
Morrisons has announced its fourth consecutive year of profit growth, but will defer its dividend as it deals with the “unprecedented challenges” brought on by the coronavirus outbreak.
Pre-tax profit rose three per cent to £408m, while sales were down 1.1 per cent to £17.5bn.
Despite an increase in sales and profit growth for the fourth consecutive year, the retailer said it would not announce another special dividend.
“We determined it would be prudent to defer the decision given current unprecedented events around Covid-19. This gives us maximum future flexibility around how we prioritise uses of our strong cash flow, and we will keep our capital allocation options under review.”
Richard Hunter, Head of Markets at interactive investor said the decision will allow the grocer extra flexibility in allocating its cash in this period.
“By the same token, such cautionary moves on company dividends are likely to become more commonplace over the next few months, with little of the negativity which would normally accompany any reduction of any dividend.”
Morrisons puts contingency plans in place
In response to the coronavirus outbreak, the supermarket said it was expanding Morrisons.com and the Morrisons store on Amazon Prime Now store-pick capacity to more than 100 stores in the coming weeks.
It said it would also ensure pay for sick and affected employees, as well as more flexibility around shifts and annual leave. It has also pledged to pay small suppliers immediately, funded by its “strong cash flow”.
Morrisons said it is “working to ensure the supply chain operates as smoothly as possible and we keep stock on the shelves.” The company noted an increase in stockpiling during the last two weeks as consumers plan for the impact of coronavirus, which increased sales by five per cent.
Yesterday, the supermarket announced it would create 3,500 new jobs to expand its home delivery service.
Morrisons has expanded its home delivery service including extra slots, a new range of “simple to order food parcels” and a phone ordering option for those without access to the internet.
Chairman Andrew Higginson and chief executive David Potts said: “We promise to work as hard as we can for customers, suppliers, and all stakeholders to keep our shops operating as smoothly as possible. Thank you to all our colleagues for your incredible efforts so far.”