Morrisons CEO Dalton Philips defends his strategy
Bradford-based supermarket chain Morrisons' CEO Dalton Philips on Thursday said that some investors might not like his strategy amid declining sales but he had the City's backing.
Mr. Philips said a tour of one hundred financial institutions as part of the company's investor roadshow, which concluded a few days back, had shown that his strategy had the broad support of the City. However, he admitted that the company is now under greater pressure.
In March, Morrisons announced its decision to spend £1 billion over the next three years to bring prices down. In addition, the supermarket chain is bringing down the number of lines it carries to lower operating costs. It is also disposing its Kiddicare business.
Mr. Philips said some investors might be angry over his strategy but he was very confident that he was taking the right decision.
Defending his strategy, he said, "I'm very confident we are doing the right things. My job is to make big, bold decisions. The proof will be when there are more items in more baskets; how could it not be the right strategy to tackle this on price?"
Investors are angry over Mr. Philips' strategy as it could not save Morrisons from declining sales. Yesterday, the supermarket chain unveiled a worse-than-expected 7.1 per cent decline in its first-quarter sales. Analysts had predicted a decline of 4.5 per cent in the company's first-quarter sales.
The fourth biggest supermarket chain of the UK, however, maintained its guidance towards underlying annual profit before tax range of £325 million to £375 million.
Stock in Morrisons regained some poise yesterday, closing at 198.9p a share, up 4.3 per cent from previous close.