Increased speculation over takeover of Morrisons by Amazon
Morrisons (LON:MRW) announced on Tuesday that customers are flocking back to supermarkets as they have become accustomed to making food at home.
The supermarket confirmed its sales rose by 2.7% for the 14-week period to 9 May, as it enjoyed busy holiday periods including Mother’s Day and Easter.
As the UK approaches normality following lockdown, Morrisons pointed to growth in sales of its snacks and takeaway food.
“The pandemic is not yet over, but it is in retreat across Britain and there is much to be positive about as something approaching normal life begins to take shape,” said Morrisons boss David Potts.
“Our forecourts are getting busier, we are seeing encouraging recent signs of a strong rebound of food-to-go, take-away counters and salad bars, and our popular cafés will soon fully reopen.”
Shoppers are now more adept and open to buying their groceries online, the supermarket said, as its online sales more than doubled compared to the year before.
“Morrisons is now at the point where it needs to think about the next stage of its career, and we’ll find out its refreshed spending plans in September. This will almost certainly involve boosting capacity to fulfil online orders and seeing how it can further expand as a supply partner,” says AJ Bell investment director Russ Mould.
Amazon Partnership
Ross Hindle, analyst at Third Bridge, noted the FTSE 250 company’s partnership with Amazon and its implications for the future.
“To avoid being stuck in an increasingly squeezed middle, Morrisons’ continues to foster its relationship with Amazon, triggering much speculation about a full-blown acquisition by Amazon in the near future.”
“Amazon Fresh helped boost online sales by 113% for the quarter. The Group has also recently expanded its offering into the brick-and-mortar channel , with three Amazon Fresh stores having opened in London already and all stocked by Morrisons. With consumers now well accustomed to online grocery shopping, Amazon has growing expectations for its Fresh concept. Our experts believe this partnership will prove a key differential growth factor for Morrisons.”
“Despite currently coming off a low base, the experts we are speaking to expect Morrisons to continue to develop its wholesale business and to increase its margin accretive non-food and clothing offer. Like the rest of the big four, Morrisons is having to look well beyond food to find some margin protection.”