Update: Morrison soars after raising forecast

21st Jul 2009 12:21

Supermarket chain Wm.Morrison soared after it said full year results are expected to beat previous forecasts due to continuing customer growth and cost cutting measures.Morrisons, benefitting from its fresh food "Market Street" ranges and its focus on price cuts and promotions, said the strong start to the year has been maintained through the second quarter. "An increasing number of customers are shopping with Morrisons attracted by the Group's fresh offering, keen positioning on price and promotions and its industry leading service and availability. This provides a solid base for the remainder of the year," it said.Brokers have ramped up their forecasts. Merrill Lynch is a buyer and is predicting pre-tax profit of £750m for the year to 31 January, 2010. Cazenove, meanwhile, has ramped up its profit forecast by a tenth to £729m and Charles Stanley expects to lift its forecasts also by 10% to £740m.The group said the resultant volume growth is helping to deliver operating leverage through supply chain benefits."Together with better than projected improvements from our Optimisation Plan margin initiatives, our ex-fuel gross margin for the full year is now expected to exceed our original plan by approximately 40 bps," it saidMorrison said the remaining Optimisation Plan initiatives are progressing well and are also expected to exceed its expectations by £20m.