Morrisons expecting weak half-year figures

The last set of figures from WM Morrisons failed to impress the markets because of the poor integration efforts with Ocado; will these be equally disappointing?

A Morrisons branch
Source: Bloomberg

The last week has seen Tesco’s desperation introduce their new CEO Dave Lewis a month earlier than it had initially planned. This action was done in conjunction with yet another profits warning for the biggest food retailer, and saw investor jitters move throughout the sector. Since this announcement WM Morrisons' shares have fallen by over 8% having spent most of August heading higher.

On paper the amalgamation of Morrisons and Ocado had plenty of promise as both companies complimented each other. Morrisons has a large and relatively loyal customer base utilising its stores, while Ocado has an excellent website and food delivery infrastructure but a small user base. One issue that did raise eyebrows was the natural demographics of their customers. Morrisons' were closer to the discount end of the market, while Ocado customers were more aligned to the premium end.

Morrisons has been at the forefront of the big-four food retailer’s price war, and these next figures, expected on 11 September, will offer the markets the first opportunity to fully analyse how successful this plan has been.

The performance of the shares over the last year has been woeful, and a test of the long-term October 2005 lows of 160p looked likely. Even rumours that private funds were looking at taking it off the market have failed to garner much support. The underperformance of the management has left many feeling the company is not making the most of its assets but struggling to see the light at the end of the tunnel just yet.

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