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Morrisons extends discount for NHS staff and strikes optimistic note on profit after big Covid cost hit

Supermarket chain Morrisons today said it would extend its 10% discount scheme for NHS workers to the end of the year as it struck a more upbeat view of Covid’s impact on its business.Profits fell 50.7% to £201 million in the year to January 31 due lar…

Supermarket chain Morrisons today said it would extend its 10% discount scheme for NHS workers to the end of the year as it struck a more upbeat view of Covid's impact on its business. Profits fell 50.7% to GBP201 million in the year to January 31 due largely to the GBP290 million of overheads run up from the ongoing costs of making its stores safe and upping manpower at its shops and food making plants. Chief executive David Potts said: "I wear the halving of profits as a badge of honour," after the company had kept the nation fed during the crisis "to avoid civil unrest."

"Frankly we could have made no profit and it would have been a result." Had it not been for those pandemic-related costs, it would have made GBP431 million, and today said next year it would beat that figure, despite its cafes currently being closed and petrol forecourts becalmed. "Naturally, none of us know when the Covid story ends, but with vaccinations racing ahead, we do know how it ends," said chief executive David Potts.

Morrisons launched its discount scheme for the NHS in April and has repeatedly extended it as the crisis rolled on. Given the public outcry over the Government's 1% pay rise proposal, it should garner positive responses from customers. "NHS staff have done, and are doing, amazing work for all of us and we think this is the best way for 'Mozzers' to show its appreciation," said Potts.

Like-for-like sales were up 8.6% with the most recent quarter up 9%, highlighting how shoppers forced to stay at home are having to cook more meals at home. Online sales tripled during the year and "more profitable than people think", said Potts, with a rapid rollout of its Morrisons on Amazon service to around 50 towns and cities. The service offers same day delivery, albeit on a more limited range than its other online schemes run in partnership with Ocado.

At the trial Amazon Fresh cashier-less store in Ealing, Morrisons' wholesale division is providing 800 product lines, he said. Some stores were now seeing more than 10% of their sales coming from the Amazon service. Potts said: "We always felt Amazon was going to be a kicker for our sales, it drives volume into the bricks and mortar business and customers are really tucking into it."

Potts said Covid had made for an extremely difficult year for the country but said "freedom is in sight." Analysts said the figures and commentary today seemed like a slightly more optimistic tone than it has struck before during the pandemic. The company handed back its GBP230 million business rate relief payment, along with other major supermarkets.

Covid overheads had "cost us a shedload," he said, "But as freedom arrives we expect things like cafes to reopen and that's why i've got a lot of confidence as things reopen." Potts did not join the chorus of logistics companies calling for a delay to the UK implementation of customs controls on EU imports later this year, saying: "We'll just crack on". But he did say he would like to see more flexibility in Britain's post Brexit immigration rules.

"The points-based immigration system does not recognise the work that needs to be done. "I would like to see that a bit more sympathetic with business. I'd like it to be easier for colleagues to come and go and continue make that contribution.

"From time to time the points based systems work against the work the country really values," he said.