Morrison fares well but remains a ‘hold' for investors

As supermarket retailer Morrison (LON:MRW) reports half year results, Sheridan Admans, investment research manager at The Share Centre, explains what they mean for investors.

"This morning, Morrison reported an increase in turnover for the first half of the year; however net profits slipped to £324m compared to £333m for the same period last year. In an effort to cut costs Morrison is planning to reduce investment in new store space to the tune of £100m. However, it still expects to press ahead with launching its convenience format in London, which will please investors as many of its competitors already have a strong presence in this arena.

"We continue to recommend Morrison as a ‘hold' as it has a strong conservative approach to management and should reap rewards for shareholders over the long-term. However, the supermarket retailer has been slow to move into online services and delivery.

"Morrison doesn't have an overseas strategy and is being subjected to fierce promotion competition in the UK where austerity means consumers are looking to make their pounds stretch further. Competition in the sector is likely to remain and although the company has been increasing market share recently it still struggles to do so against Tesco, which has seen its own market share eroded by other competition."