24 May 2001
Wm Morrison supermarkets Plc
Annual General Meeting
24 May 2001
COMMENTS MADE BY THE CHAIRMAN AT THE ANNUAL GENERAL MEETING ON 24TH MAY 2001
I would now like to take the opportunity to bring you more fully up to date
with your company's progress.
Once again we have experienced a period of good solid progress:
* confirming our position as Britain's fastest growing national
supermarket chain, with an increase in market share (from 4.7% to 5.3%)
* reporting strong sales growth and joining the FTSE 100 for the first
* seeing a rise in customer numbers - over 3 million a week,
* and announcing further expansion plans.
Our healthy performance confirms the popular appeal of simply focusing on
offering everyday good value. The merits of our trading philosophy clearly
* by quietly getting on with the business of good shopkeeping;
* ensuring that our stores are kept up-to-date;
* our staff are always friendly;
* and that our prices remain competitive,
we are growing market share and winning customers.
Our shoppers know they can rely on us for consistently good value, outstanding
customer service and the freshest foods available. This consistency and
reliability is earning us the highest level of customer loyalty in the
industry - a resounding vote of confidence in our straightforward,
down-to-earth approach. There is no substitute for maintaining a proper
understanding of customers' needs and we have every intention of building
further on this strength.
We have experienced some formidable trading difficulties recently:
* first, the petrol crisis,
* then, foot and mouth disease
both of which affected some of our suppliers badly. Our investment in our own
manufacturing and support facilities really proved its worth during these
times, enabling us to move very quickly and respond positively to market
conditions. Together with a superb effort from our staff, we were able to
ensure the necessary supplies got through. Availability was good throughout,
putting us in a far stronger trading position than many of our much larger
competitors. We really do have an excellent team and I would like to take
this opportunity to thank them for their constant hard work and support.
* We are particularly delighted that our transport and maintenance teams,
often unsung heroes, were recognised recently with a Lifetime Achievement
Award. Presented by Shell UK on behalf of the road haulage industry, the
award was given in recognition of our commitment to maintaining the highest
standard of fleet operations.
* We were also praised for our work to reduce the environmental impact of
our HGV's through rigorous maintenance, new engineering developments and fuel
efficiency. This pays great tribute to the skills of everyone concerned and
we are proud to have received this award.
This year more than 24,000 employees shared in the company's success,
qualifying for the company's 23rd profit share and sharing a record £11
million - a profit share pool 11% higher than last year. In addition, over
9,000 workers (more than 40% of those eligible) joined last year's Sharesave
Scheme, giving them the opportunity in the future to buy shares in the company
at a discount price.
Our staff must also be congratulated for raising a magnificent and
record-breaking £418,000 for Childline. Our new Charity of the Year is 'Save
the Children' and I am sure they can expect to benefit just as greatly from
the wholehearted fundraising efforts of our employees throughout the business.
The farming community is currently experiencing great difficulties. We buy
directly from many farmers and through our regular dialogue with the
agricultural community we have a very real understanding of the hardship many
are facing in coping with one setback after another. Our industry needs the
produce supplied by UK farmers to ensure a constant supply of top quality
products. In order to help during their present difficulties we have made a
charitable donation of £200,000 to help ease the hardship being suffered as a
result of the foot and mouth outbreak.
We have also provided practical support to farming businesses by speeding up
payments to livestock suppliers, so that bills are paid within 48 hours.
These actions are entirely consistent with the support we have given to the
country's farmers over many years and we will be continuing to make every
effort to help the industry through this crisis and beyond.
Our expansion programme continues apace. Last year's 12 successful openings,
together with on-going investment in existing stores and the major extension
of our produce packing plant in Bradford, created some 3,000 jobs. We now
employ over 40,000 people.
This year we are creating 2,000 jobs with seven stores set to open - four
completely new and three replacements for older stores. This will take the
total to 114 by the end of the year.
The first of this year's new stores opens in Jarrow on Monday, 18th June.
Later in the year we will also see the first Morrisons stores to open their
doors in South Wales, in Barry and Newport. At this stage firm plans are
progressing to open four new stores in 2002 at Grays, King's Lynn, Newcastle
and Redcar - creating at least a further 1,500 jobs. In addition we intend
to rebuild existing stores in Failsworth and St. Helens. The refurbishment
programme continues unabated and will embrace many of our existing stores and
will include a major extension of our store at Wetherby.
We remain keen to expand into new areas of the country currently dominated by
the bigger operators and had hoped to see competition in the sector stimulated
by planning changes embodied in the recommendations of the Competition
Commission. This hope has yet to be realised as the remedy appears to have
found little favour with the central government's department concerned with
planning matters. Their indifference is hindering our chances of acquiring
further sites in areas where we are not currently represented. We feel the
shopping public is being deprived of the opportunity to enjoy shopping with
Turning to current trading, I have to report that in spite of many comments to
the effect that supermarket trading conditions are benign, margins remain
under pressure. In particular, the climate in our motor fuel business
remains harsh with the level of sterling against the dollar and high crude oil
prices making life difficult. The oil majors have exploration, crude oil and
refining profits to support their operations and do not need to rely on
forecourt profitability. The supermarket industry has over recent years
played a key role in bringing more competitive fuel pricing to the UK
motorist, an area in which we have been leaders. Government must ensure that
the motorist has a range of forecourts from which to choose and must not allow
the major oil companies to once again dominate the U.K.
The abolition of Retail Price Maintenance on patent medicines is very welcome
and will open up a new avenue for us to increase our sales.
I am delighted to be able to report that sales during the 13 weeks of this
current year have increased by 15.3% and like-for-like sales are 7.7% ahead or
7% if petrol sales are excluded.
We have never lost sight of the fact that our business is all about volume and
we fully intend to maintain our sales momentum in the year ahead. Whilst
margins remain under pressure, it is the company's firm intention to maintain
our highly competitive position in the marketplace and drive the business
forward on the strength of our sales performance. Shoppers remain selective
and prudent and I am confident that our sound value-for-money proposition
will enable us to build upon our exceptionally robust trading position. I am
looking forward with confidence to continued good growth in the year ahead.