Financial Trading Blog
Stock of the day 03/11/2015 – WM Morrison Supermarkets PLC
Can it get investors back in the aisles with its Q3 trading statement on Thursday?
Morrisons’ last earnings release back in September made for grim reading. A whopping 47% fall in half year profits to £126 million, inspired by a 2.7% drop in like-for-like sales, pushed the supermarket to take some rather drastic measures. It announced it would be closing 11 of its flagship stores and, in an even starker move, would be selling 140 of its local ‘M’ stores (incurring a £30 million hit in the process).
(Source: IT-Finance.com 03/11/2015)
Already in decline, that report helped push Morrisons to a 2015, and year, low of £1.50 towards the end of September. Interestingly the news that the supermarket would be paying its employees the new Living Wage helped lift the stock by 6% as September turned into October, sparking a slight resurgence that, after reaching the heady heights of £1.79, has culminated in a current trading price of £1.72 (IT-Finance.com, 03/11/2015).
Yet Morrisons’ improved position might not last for long. Analysts are expecting another 2% fall in its like-for-like sales, Morrisons’ seemingly failing to provide an adequate tourniquet as it haemorrhages customers. To compound matters, the supermarket’s announcement this week that it would be going head to head with Pret A Manger and EAT for a slice of the lucrative UK lunch market by launching its own brand of fresh in-store sandwiches smacked more of a desperate company throwing everything at the wall instead of a healthy chain expanding into a new area.
WM Morrison Supermarket PLC has been given a consensus rating of ‘Hold’ alongside an average target price of £1.84.
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