After a rocky few months, that saw WM Morrison shares dive to an 18 month low of £2.04 by late-March, the supermarket had settled into a nice little rhythm as 2018 progressed, eventually climbing to £2.70 by the end of August, hitting a near 4 year peak in the process.
Yet mid-September’s half year results soured the shopping trip; combine that with October’s market horrors and the company has found itself trapped between £2.45 and £2.50. WM Morrison shares now sit at a current trading price of £2.48.
So, what was the issue with Morrison’s interim update?
Well, there was actually a lot to celebrate. Group like-for-like sales (excluding fuel and VAT) were up a hefty 4.9%, a big improvement on the 3% increase seen at the same time the previous year thanks to the 9-year high 6.3% surge posted in Q2.
Total revenue, meanwhile, jumped 4.5% to £8.8 billion, with underlying pre-tax profit rising 9% to £193 million.
However, reported pre-tax profit was down 29% to £142 million due to charges related to ‘successful bond tender offers’ and ‘a change in methodology for estimating stock provisions’.
This detail seemed overshadow the good news elsewhere – which also included the announcement of a 2p special interim dividend – as WM Morrison shares fell post-release.
Morrison’s third-quarter update
In terms of Tuesday’s Q3 update, investors will want to see the continuation of the company’s really strong like-for-like sales growth, though it might be unable to match Q2’s 9 year high given that quarter benefited from the heatwave and England’s successful World Cup run.
WM Morrison shares have a consensus rating of ‘Hold’ alongside an average target price of £2.55.
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