Morrisons has revealed it cut more than 8,800 jobs last year – almost 8% of its total workforce – while making a loss of more than £1bn after a debt-fuelled private equity takeover in 2021.
The UK’s fifth largest supermarket chain reported total finance costs of £735m, up from £590m the year before, according to its latest annual accounts for the year to 29 October.
It was the second consecutive year in which Morrisons lost more than £1bn, after reporting a loss before tax of £1.5bn in 2022.
The supermarket chain has struggled to compete against the rapidly expanding discounters Aldi and Lidl and a resurgent Tesco and Sainsbury’s. Aldi overtook Morrisons to become the fourth largest supermarket in the UK in 2022.
The accounts show Morrisons’ losses rose despite action to reduce costs, including cutting store staff numbers by almost 7,000 and removing more than 780 jobs in its distribution network, more than 730 roles in its manufacturing facilities and almost 400 at its head office.
Morrisons said there had been no redundancy programme in the past year and the job reduction was the result of not replacing those who had chosen to leave.
The chain was bought by the US private equity investor Clayton Dubilier & Rice (CD&R) in October 2021, in a deal that marked a move away from the ethos of Sir Ken Morrison, who built the company up from his father’s market stall in Bradford.
Morrisons’ net debt obligations were £3.2bn before the CD&R takeover. The parent company – a legacy of the takeover called Market Topco – reported that net debts at the end of 2023 increased to £8.6bn. Borrowing was up last year after the acquisition of McColl’s convenience store chain for £201m in late 2022.
As the company’s debt pile has grown, it has also had to contend with rapidly changing conditions. Interest rates have soared since the takeover, while shoppers have been more cautious about spending during the cost of living crisis.
Rami Baitiéh, who took over from David Potts as the Morrisons chief executive in November, has said the company will try to listen to customers more as it seeks to turn around its fortunes.
Morrisons reported a drop in revenue during the 2023 financial year, from £18.7bn to £18.4bn, although much of that decline was down to lower fuel sales after global oil prices fell.
The company said its underlying profit, stripping out debt costs and other “exceptional” items, was £970m.
The steep losses have prompted Morrisons’ owners to look at ways to reduce its debts. In January Morrisons sold 337 petrol station forecourts to Motor Fuel Group in a £2.5bn deal. Motor Fuel Group is also owned by CD&R, and Morrisons will have a stake in the petrol stations company.
