Supermarket Morrisons (LON:MRW) continued to show signs of recovery in their annual posting on Thursday, with an increase in annual profits.
After taking into account unforeseen one-off costs, profits rose 11.6 percent in 2016 to £ 335 million, marking the supermarkets first increase in the last difficult five years.
In addition, like-for-like sales witnessed growth of 1.7 percent, while total revenue rose 1.2 percent to £16.3 billion, having enjoyed a strong Christmas sales period.
Despite the strong performance figures, Chairman Andy Higginson acknowledged challenges. He commented:“Food retail is a simple business, but it is not easy,”
“Only consistent and outstanding execution differentiates. I am delighted that the whole Morrisons team are making a real difference.” He added.
Chief executive David Potts said: “Our full year of like-for-like sales and profit growth was powered by listening to customers, and shows what our hard-working team of food makers and shopkeepers can do.”
Ultimately, Mr Potts remained cautious in his outlook for the supermarket chain given rising costs and economic uncertainty. He continued:
“It’s only one year,’” he said. “Our turnaround has just started, and we have more plans and important work ahead. If we keep improving the customer shopping trip, I am confident that Morrisons will continue to grow.”
Morrisons turnaround initiative has included a reduction of costs by £1 billion alongside the closure of almost 28 supermarkets and 140 convenience store locations around the country. The move has generate almost £900 million for the chain.
Ultimately, Mr Potts warned of potential difficulties lying ahead as a result of pound currency fluctuations.
He commented: “some uncertainties ahead, especially around the impact on imported food prices if sterling stays at lower levels. We also expect depreciation and pension costs to increase, and we will continue to invest in colleague pay rates. However, all of this is incorporated into our plan”.
The major UK supermarkets have been feeling the pressure from emerging challengers, Aldi and Lidl. Both chains now control nearly 11 percent of the UK grocery market.
Shares in Morrisons are currently down 5.87 percent as of 12.36PM (GMT).