Morrisons Holds Earnings Steady as Rising Costs Offset Sales Gains

Morrisons has reported flat annual earnings as rising costs outweighed improved sales momentum, highlighting the pressure facing major UK supermarkets despite stronger trading over the Christmas period. The grocery chain said underlying earnings for the year remained unchanged even as revenues increased, with higher operating expenses absorbing much of the growth. Company executives pointed to a combination of cost pressures, including policy related expenses and inflation, which limited profit expansion. While the retailer managed to increase turnover, the overall performance underlined how challenging the trading environment remains for food retailers operating on tight margins. The results reflect a broader trend across the sector, where supermarkets are balancing competitive pricing with rising wage, energy and supply chain costs. For Morrisons, the year marked steady but constrained progress as management continued efforts to stabilise performance.

Trading showed signs of improvement toward the end of the year, particularly during the crucial Christmas period. Like for like sales strengthened in the final weeks, supported by strong demand for premium own label products, which outperformed the rest of the range. The company said festive trading provided a solid base for the new financial year, offering some encouragement after a mixed performance earlier in the period. However, industry data indicates Morrisons continues to lag behind several key rivals in market share growth. While competitors delivered stronger seasonal updates, Morrisons faced challenges linked to its cost base and operational structure. Chief executive Rami Baitiéh said the business is continuing a long term modernisation programme aimed at improving efficiency and competitiveness.

At a statutory level, Morrisons remained loss making, though losses narrowed compared with the previous year as debt levels continued to fall. The supermarket group, owned by Clayton Dubilier & Rice, has been reducing leverage while managing the financial impact of higher interest and depreciation charges. Analysts note that while progress has been made in strengthening the balance sheet, sustained earnings growth will depend on Morrisons’ ability to control costs and close the performance gap with rivals such as Tesco and Sainsbury’s. With consumer spending under pressure, the coming months will be critical in determining whether recent trading improvements can translate into stronger profitability.