Supermarket group Morrisons revealed today that it had returned to profit during the first-half of the year, as the grocery chain finally begins to reap the benefits of its troubled £3 billion takeover of former rival Safeway.
Morrisons was forced into the red for the first time in its 106-year history as a result of higher-than-expected costs resulting from the 2004 acquisition.
Unveiling interim results for the 25 weeks ending July 23rd, the company revealed that its pre-tax profit for the period was £134.2 million, compared to an £82.1 million first-half loss last year.
The Bradford-based group said that like-for-like sales, excluding fuel, rose 5.9 per cent in the first eight weeks of its second-half, while like-for-like sales at outlets excluding new stores rose by 4.6 per cent in the first-half.
Turnover for the 25 weeks to July 23rd remained flat at £5.85 billion, but Morrisons said that the performance was "satisfactory" given that 66 of its stores had been sold over the period.
The retailer added that "strong growth" had been achieved in stores which had been converted from the Safeway brand.
Meanwhile, Morrisons said that it was confident of delivering "good improvements" in like-for-like sales and profitability over 2006/7 following the adoption of a three-year optimisation plan in the wake of its takeover of Safeway.
The strategy, which has led to the closure of three Morrisons depots and the loss of 1,800 jobs since December was resulting in "improvements coming through solidly and sustainably", the retailer said.
Welcoming the results, Morrisons chairman Sir Ken Morrison said: "We have more customers now than ever before in our history.
"Our business is growing again, and we are well on track with our targeted profit improvements," he added.
Sir Ken, forced to relinquish day-to-day running of Morrisons to its new chief executive Marc Bolland in the wake of previous shareholder unease over the retailer's difficult takeover of Safeway, added: "Marc Bolland joins a business moving firmly in the right direction, and I have every confidence that he will lead us to future success."