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Morrisons has boosted its medium-term savings target to £1billion, as the supermarket faces growing costs and the lingering impact of a major cyber security incident.
The retailer’s chief executive Rami Baitiéh has previously warned of an ‘avalanche of costs’ arrising from changes announced in Chancellor Rachel Reeves’ Autumn Budget, which the British Retail Consortium estimates will add an addition £7billion to its members’ cost base.
Baitiéh told shareholders on Thursday that Morrisons made £56million of cost savings in the three months to to 26 January and the group expects to deliver the remainder of an initial £700million over the the second quarter.
He added: ‘We are today increasing our target to £1 billion which will help us offset cost headwinds, invest for customers and remain competitive in a fast changing market.’
Morrisons chief executive Rami Baitié said the group has made ‘exceptional progress in a very short time’ despite a ‘challenging environment’
It came as Morrisons reported 2.1 per cent like-for-like sales growth for its first fiscal quarter, with total sales up 2.4 per cent to £4billion.
Baitiéh said he was ‘very pleased’ with the result and cited the lingering impact of the November Blue Yonder cyber attack, which ’caused a far reaching period of disruption across the businesses, affecting our stock accuracy, availability, waste and forecasting’.
Morrisons is one of a number of high street giants to announce job cuts in recent months ahead of even higher labour costs from April, when increases to employer National Insurance contributions and the minimum wage come into effect.
Worrying figures last week revealed 249,000 retail jobs have been lost in the past five years.
Morrisons was one of over 70 businesses, including Tesco, Asda and Sainsbury’s, that told Reeves in a recent open letter that changes announced in the Budget meant price rises were a ‘certainty’.
The group also reported further success on its loyalty card scheme on Wednesday, with linked sales hitting an all time of 78 per cent after helping to propel turnover higher last year.
Baitiéh said: ‘Despite a challenging environment, Morrisons has made exceptional progress in a very short time and that is entirely down to the hard work, positivity, talent and customer focus of the colleagues in our stores, in our foodmaking sites and in our operations across the country.’
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