Morrisons’ new chief executive was left with a mountain to climb today as the supermarket he takes over next week plunged into the red and flagged up a dividend cut.
David Potts arrives from Tesco on Monday to a £1.27 billion property writedown on its supermarket portfolio, a painful 5.9% fall in like-for-like sales as a supermarket price war bites, and a £792 million pre-tax loss.
Shareholders will take some of the pain with a dividend cut from next year.
New chairman Andy Higginson maintained the company’s promise to raise the dividend this year by 5% to 13.65p but from next year it will be “no less” than 5p.
Higginson said: “All the options were on the table but there was no serious risk of a 0p dividend.
"We’re trying to take a balanced view so that David will have enough money to work with when he arrives.”
Staff are also set to suffer, with nearly 400 expected to lose their jobs as the company axes 23 M Local convenience stores across the country.
Opening convenience stores had been a key aim for ousted previous boss Dalton Philips, but the new regime has vowed to slow down openings.
Higginson refused to criticise Philips for his part in today’s results. He said: “The fundamental business is a good business and it’s been allowed to drift a bit of late.
“There is a poor history in this sector of blaming previous regimes and I don’t want to get into that.”
He also backed finance director Trevor Strain, who had stepped up as interim chief executive, despite being Philips’ right-hand man for more than two years.
Excluding the writedowns, pre-tax profits were £345 million, down 52% but in line with expectations.
