The supermarket has gone further to prepare the ground for the arrival of new chief executive David Potts than I expected.
The big news is that Morrisons 2015/16 dividend has been cut to not less than 5p per share a cut of up to 63% on the 2014/15 payout of 13.65p, which was confirmed today.
The firm also said it would significantly slow the roll-out of its M local convenience stores, shutting a further 23 in 2015/16, and introducing much tougher selection criteria for new sites.
All of which suggests to me that the firms board has decided that outgoing chief executive Dalton Philips plans werent quite the right medicine for Morrisons problems.
Morrisons reported a pre-tax loss of 792m this morning, down from a loss of 176m last year. Fortunately, this isnt a cash loss its the result of the supermarket booking a 1,273m impairment on the value of its property portfolio.
However, this isnt great news for value investors, as one of the key appeals of Morrisons was the value of its freehold property: Morrisons book value is now just 154p per share, down from around 200p previously.
What about the good news?
Like-for-like sales were down by 5.9% on the year, but the quarterly figures show clear improvements, with sales falling by just 2.6% in the final quarter of the year, compared to 7.1% during the first quarter.
Total sales of 16.8bn were slightly below consensus forecasts for 17.0bn, but the firms underlying operating profit of 442m was broadly as expected, giving an underlying operating profit margin of 2.6%, which I expect will compare reasonably well with both Tesco and J Sainsburys full-year figures.
Behind the scenes
The group managed to reduce net debt by from 2,817m to 2,340m, and capital expenditure was cut by more than 50% to just 520m, down from 1,086m during 2013/14.
Other positive developments include news that Morrisons new IT systems, which automatically order new stock for stores based on items sold, are moving into trial.
Is Morrisons a buy?
Morrisons didnt issue any guidance for the current year today that will come once new chief executive David Potts takes charge and has had a chance to review the firms plans.
Until then, I reckon Morrisons shares rate as a hold, as the outlook seems quite evenly balanced.
Today’s best retail buy?
I’m not convinced that Morrison’s is the best retail buy in today’s market.
One alternative that’s caught my eye is a UK retailer with much higher profit margins that’s in the middle of a major online rollout.
Unlike Morrisons, sales at this well-known firm could treble over the next five years, according to the Motley Fool’s analysts.
You can find out more in “3 Hidden Factors Behind This Daring E-commerce Play“.
This report is completely FREE and without obligation.
To receive your copy immediately, click here now.
Do NOT buy these stocks
Theres lots of opportunity out there in todays market but theres also PLENTY of danger.
In anticipation of Champion Shares PROs brief opening to new membership a few short weeks from now, the analyst team behind the Motley Fools most exclusive service has agreed to share 3 stocks they believe YOU would do best to avoid.
PRO research is rarely made available to the general public. To find out the names of these “don’t buy” companies — and to claim your 100% FREE copy of Steer Clear Stocks right away — simply click here.