Morrisons - comment

Morrisons will remain under pressure as price competition continues. However, Morrisons has access to capital via the S&L market (at 6.5% or lower) and limited maturities before the 2027 SUNs maturity. Sales rose 3.0% LFL, but with food inflation of 4.5%, volumes are under pressure. Management acknowledged this and said the trend will continue into Q4. Underlying EBITDA was flat at GBP 239m, but this is against >GBP60m of cost reductions, which were consumed by higher costs and price support. The cost-saving programme has already delivered GBP789m, with GBP200m to come in FYE 26. However, much of these additional savings will also go into supporting volumes and higher taxes. Next year, additional taxes will add GBP180m (annualised) to the cost base (around GBP70m will be reflected in the 2024/25 results).