Online strategy switch costs Morrisons £27m

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Morrisons has written off £27m of the costs incurred in the development of its own food online offer which was no longer required after it decided to work with Ocado.

Nevertheless, online was a bright spot in an otherwise difficult year for the supermarket chain.

In its results for the year to 1st February, it said that from a standing start and first delivery in January 2014, it exited 2014/15 with around £200m of annualised sales and near- 50 per cent coverage of all UK households, in line with its initial targets.

Alongside Ocado, it started to operate out of Dordon, initially servicing Warwickshire and Yorkshire. During the year, it also began trading from spokes in Leeds, Manchester, North London, Sheffield, Merseyside and Bristol.


It said that during the busiest week of the year pre- Christmas, Morrisons on-time delivery was 97.5 per cent and product substitutions were only 1.4 per cent.

During 2015/16, it plans to open at least one additional spoke saying the focus would be on increasing delivery density within its existing coverage area. It will also trial other methods of customer delivery.

The group has reported an operating loss of £696m for the year – against a loss of £95m last year. Sales were down from £17.7bn to £16.8bn.

It is closing 23 underperforming convenience stores and slowing new openings. It said it was not seeing the expected level of performance from the convenience business and would review the M Local proposition.

A new chief executive David Potts will starts on Monday tasked with revitalising the core supermarket business.

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