Morrisons announced that its profits were cut by more than half over the past year.
However, the board chairman said it was a “badge of honor” after the supermarket group was burdened by pandemic-related Covid-19 costs of £ 290 million.
The group announced to investors that pre-tax income and extraordinary charges were down 50.7% to £ 201 million for the year ended January 31st.
The Bradford-based retailer said that following a recent spike in absenteeism, it was hit by above-expected pandemic costs as well as the impact of returning its £ 230 million business rate relief to the Treasury Department.
Group like-for-like sales excluding fuel and VAT increased 8.6% as it was driven by strong demand for groceries and grew 9% in a strong final quarter.
Online sales tripled during the year as capacity increased fivefold, according to Morrisons.
Both online and wholesale operations are profitable and are expected to continue to improve.
The company expects higher profits for the new fiscal year and has had “strong trading” since the beginning of February.
Chief Executive Officer David Potts told reporters he wore the halving of his profits as a “badge of honor” as it would be influenced by costs related to employee absenteeism, hiring of temporary workers, security and security measures for stores.
“If we hadn’t made a profit it would have been fine since we did the right thing from our colleagues and customers,” he said.
He announced the update as the retailer announced that it would extend its 10% discount program for NHS employees until the end of the year.
Andrew Higginson, Chairman of the Company, said: “This year, Morrisons’ resilience has been tested and I couldn’t be more proud of how the entire company passed the test.
“As we look forward to better times, Morrisons will become a stronger, better business with deeper and closer relationships with our customers and the communities we serve.”
Potts added: “I am delighted with the greater recognition, warmth and affection for the Morrisons brand from all corners of the country after a year like no other.
“We have to look forward to now with hope of better times for everyone and are confident that we can bring our strong momentum into the new year to achieve earnings growth and significantly lower net debt in the 2021-22 period.”
John Moore, Senior Investment Manager at Brewin Dolphin, said: “This time last year, many people expected supermarkets to be among the companies to emerge from Covid-19 – even as ‘winners’ – but today’s results from Morrisons underscore the complexity that challenged this prospect.
“The supermarket group has taken on a number of exceptional costs that have contributed significantly to halving profits.
“Some of them stem from Morrison’s decision to do the right thing, which is a testament to his culture. However, foregoing interest rate breaks, paying a bonus to employees, and contributing to food banks should also help keep them with customers stand.”