Morrisons has reported a strong acceleration in sales as the private-equity-owned supermarket pushes closer to £1bn in cumulative cost savings.
Like-for-like sales jumped 3.2 per cent to £1.4bn in the three months to the end of July, with chief executive Rami Batièh crediting record summer temperatures and the World Cup for the improved performance.
Batièh, who joined Morrisons to lead its turnaround in 2023, said the cost-cutting regime is delivering a broad-based improvement across the entire group.
The grocer achieved £53m in cost savings during the quarter alone, pushing total savings to £995m since the programme launched in March 2023.
Morrisons said those savings are helping to reduce net debt and counter headwinds caused by the war in Iran, which has pushed up supply costs and weakened consumer confidence.
Batièh said: “Our stronger sales momentum reflected a broad-based improvement across the business, with our supermarkets, online, convenience, pharmacy and Myton manufacturing businesses all reporting good growth, underlining our progress with our plans to renew and modernise Morrisons.”
He added: “Key to this performance is our continued commitment to keeping prices low. The recent launch of our Unbeatables price promise, which guarantees customers won’t find better value on hundreds of essential products at named major supermarkets, has already had a positive impact.”
Last month, Morrisons pledged to match rivals on prices for hundreds of essential products, including bananas, bread, chicken, bacon and pizza.
That commitment has intensified an emerging price war across the UK grocery sector, as supermarkets compete to demonstrate they are not exploiting the Iran conflict as justification to raise prices.
The group confirmed it will accelerate the expansion of its Morrisons Daily convenience arm, having already opened 71 new sites this year, with plans for hundreds more in the coming years.
Morrisons has also closed dozens of unprofitable convenience stores it acquired from McColl’s in 2022, as it reshapes the portfolio for sustainable growth.
The debt burden accumulated since Clayton Dubilier and Rice completed its 2021 takeover of the supermarket chain remains a central challenge for the business.
Net debt grew from £7.1bn to £7.5bn last year, forcing Morrisons to take significant steps including selling the freehold rights on large parts of its property portfolio.
The group said it has cut its debt by 46 per cent since 2022 and maintains freehold ownership of most of its supermarket estate, providing a degree of financial resilience.
Finance chief Jo Goff said: “Cumulative cost savings now approaching £1bn helped us offset extensive external cost headwinds while also focussing on what is most important; investment in our colleagues and in stronger value for customers.”
Goff added: “Our working capital improvement programme continues to progress well and our confidence that there is more to come is demonstrated by our decision to raise our target today to £750m.”