Morrisons (LON:MRW) reported a 17 per cent rise in profits on Wednesday, reaping the results from a turnaround initiative, in spite of a difficult trading environment.
The UK’s fourth largest supermarket pointed in particular to strong sales of local suppliers’ foods, which has risen 50 percent across the last few years.
Morrisons has agreed deals with more than 200 farmers and UK based suppliers, in a bid to counteract restricted food supplies in light of uncertain political circumstances, climate change and adverse weather conditions.
Overall, the supermarket posted a 5.8 percent increase in total annual sales to £17.3 billion. Sales at established locations, excluding fuel revenues, rose 2.8 percent.
This was driven in part by deals with Amazon (NASDAQ:AMZN) and McColl’s convenience store chains, alongside the expansion of smaller locations with later opening times.
Morrisons said it was pay 4p a share special dividend on top of its 4.43p final dividend, in light of underlying pretax profits growing by 11 percent to £374 million in the year to February.
Andrew Higginson, chairman, commented: “Morrisons is now entering its third consecutive year of growth, which is a credit to the whole team. We will continue to prioritise consistent, meaningful and sustainable growth, which I am confident we are well placed to keep delivering.”
Despite the promising performance, shares fell as much 3.7 percent on Wednesday morning.
Investors remain cautious of sustained growth in light of political uncertainties and a difficult retail environment.
The larger supermarkets such as Tesco (LON:TSCO) and Sainsbury’s (LON:SBRY) are also facing pressure from emerging competitors such as Lidl and Aldi, who continue to grow their market share.
In the past month, various U.K high street restaurant chains and stores have been announcing closures, in light of difficult circumstances and shifts in consumer spending levels and trends.
Notably, both Toys R Us and Maplins fell into administration in recent weeks, with both retailers failing to locate a potential buyer.
Shares in the supermarket are currently trading -4.64 percent as of 14.00PM (GMT).
