Arrival Of new chief could mark turning point for Morrisons

Morrisons said its new Chief Executive spent his first day visiting various areas of the business.

Philips joins Morrisons at a resurgent time for the UK's fourth largest supermarket. It recently reported a 21% hike in annual profits, while like-for-like sales rose 6%. His predecessor Marc Bolland successfully turned the group around to see it become the sector's star performer in recent years, notching up stellar sales growth that left larger rivals trailing behind. However, with competition in the sector showing no sign of easing and falling food inflation putting sales growth and profit margins under pressure, investors will be keen to find out how Philips plans to maintain Morrisons momentum in the year ahead.

Morrisons Chairman Sir Ian Gibson has signalled he doesn’t expect any quick changes by Dalton, although Darren Shirley, an analyst at Shore Capital said his arrival could mark a turning point for the retailer. “Morrisons has just confirmed a vintage year,” he said. “Can the bouquet remain so fine in future years? Some say Morrisons should stick to its knitting, but we question the growth and rating potential from a future based solely in UK grocery.

“With Philips’ arrival, Morrisons may have the balance sheet resource, capability and importantly the appetite to consider the process of meaningful diversification”.

Shirley said there is no point in trying to re-invent the wheel. Top of the pile is the safe and logical option of launching different types of store format. Morrisons has focused on midsize supermarkets, but could easily branch into convenience outlets or open hypermarkets. It could open more stores adjacent to its petrol stations.

Next, as it modernises its IT platform, a loyalty card could become viable. Morrisons already has a Christmas savings scheme and a fuel card but an electronic database could help understand its shoppers and tailor its vouchers and promotions. Shirley said, “Is the company best served by concentrating on supplying an open and largely anonymous market?”

Morrisons has also yet to make a major push into the non-food sector and does not have an online offering, which would seem obvious move for Philips in the medium term.