Morrisons cautious despite profit

Supermarket group Morrisons has reported a rise in annual profit but has also warned that 2011 will be challenging.

The company announced a pre-tax profit of £874m for the 12 months to the end of January, up from the £858m it made in the same period a year ago.

Like-for-like sales, excluding fuel and VAT, rose 0.9%.

The group also said it planned to launch an online shopping service in the coming two years.

Morrisons is the UK’s fourth largest supermarket chain, after Tesco, Asda and Sainsbury’s, and is the only one of the “Big Four” without a significant online business.

As it continues to carry out research into e-commerce, it also announced a £32m investment in US internet grocer FreshDirect, which will see it take a 10% stake in the firm.

“They are leaders in fresh food online and they do it profitably,” chief executive Dalton Philips told the BBC.

This marked its second e-commerce investment in as many months, after February’s acquisition of baby goods website Kiddicare for £70m.

Morrisons also said it was exploring the idea of opening convenience stores, with plans to open three trial stores this year.

In addition, the group said it would return £1bn to shareholders over two years and was committed to double-digit dividend growth over the next three years.

But it also said in a statement: “We expect the economic backdrop to remain challenging in 2011, with higher taxes, government spending cuts, inflation and rising unemployment all continuing to weigh on consumer confidence and disposable incomes.”