Morrisons has revealed it made a loss of more than £1bn last year, in part because of the rising cost of debts incurred during a private equity takeover in 2021.
The UK’s fifth-largest supermarket had to pay finance costs of £735m, up from £590m the year before, according to its latest annual accounts for the year to 29 October.
It was the second consecutive year in which the supermarket lost more than £1bn, after reporting a loss before tax of £1.5bn in 2022.
The chain was bought by US private equity investor Clayton Dubilier & Rice (CD&R) in October 2021, in a deal that marked a move away from the ethos of Sir Ken Morrison, who built the company up from his father’s market stall in Bradford.
Morrisons’ net debt obligations were £3.2bn before the CD&R takeover. The parent company – a legacy of the takeover called Market Topco – reported that net debts at the end of 2023 rose to £8.6bn.
As the company’s debt pile has grown it has also had to contend with rapidly changing conditions. Interest rates have soared since the takeover, resulting in increasing debt servicing costs.
The cost of living crisis and the global energy crisis have also had an impact on British shoppers, while Morrisons has faced stiff competition from the German discounters Aldi and Lidl. Aldi overtook Morrisons as the fourth-largest supermarket in the UK in 2022.
Rami Baitiéh, who took over from David Potts as the Morrisons chief executive in November, has said the company will try to listen to customers more as it seeks to turn around its fortunes.
Morrisons reported a drop in revenue during the 2023 financial year, from £18.7bn to £18.4bn, although much of that decline was down to lower fuel sales after global oil prices fell.
after newsletter promotion
The company said that its underlying profit – stripping out debt costs and other “exceptional” items – was £970m.
The steep losses have prompted its owners to look at ways to reduce its debts. Morrisons in January sold 337 petrol station forecourts to Motor Fuel Group in a £2.5bn deal. Motor Fuel Group is also owned by CD&R, and Morrisons will have a stake in the petrol stations company.
Robert Johnson is a UK-based business writer specializing in finance and entrepreneurship. With an eye for market trends and a keen interest in the corporate world, he offers readers valuable insights into business developments.
