LONDON (Reuters) - Morrisons MRW.L, Britain's fourth largest supermarket group, spent 155 million pounds ($202 million) dealing with the COVID-19 pandemic in its first half to August 2, resulting in a 25.3% fall in first half profit.
Shares in Morrisons were down 4.5% at 0818 GMT on Thursday, even though the group forecast profit growth for the full 2020-21 year.
But the flip side has been additional costs related to staff and customer safety in stores, payroll and the ramp-up of home deliveries, only partially mitigated by government business rates relief.
The group, which said in May that full year profit would be more weighted to the second half than usual, made underlying pretax profit of 148 million pounds ($193 million) in its first half - ahead of analysts’ average forecast but below the 198 million pounds made in the same period last year.
Second-quarter group like-for-like sales, excluding fuel, increased 12.3%, having risen 5.7% in the first quarter.
“I believe we are seeing the renaissance of British supermarkets,” Morrisons CEO David Potts told reporters.
The first half sales growth was driven by online channels and lower margin categories. Morrisons' online and home delivery order capacity increased five-fold during the half, including through Amazon AMZN.O.
“We’re confident that our strong momentum will continue into the second half and deliver another year of profit growth,” said Potts.
Prior to the update analysts were on average forecasting a full-year profit of 432 million pounds, up from 408 million pounds in 2019-20.
Morrisons paid an interim dividend of 2.04 pence, up 5.7%, but again deferred a decision on a special dividend.
Potts said the group was well placed for Brexit, even if Britain fails to agree a trade deal with the European Union, because two thirds of what it sells is British.
($1 = 0.7686 pounds)
Reporting by James Davey; Editing by Jan Harvey and Elaine Hardcastle
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