UK's Morrisons says coronavirus is 'unprecedented challenge'

By James Davey

LONDON (Reuters) - British supermarket group Morrisons <MRW.L> said on Wednesday it would play its part in feeding the nation during the coronavirus emergency but warned it was facing "unprecedented challenges and uncertainty".

British supermarkets have struggled for two weeks to keep shelves stocked in the face of intense panic buying, which worsened on Tuesday despite weekend appeals for calm from supermarket bosses and politicians. Online grocery operations have also been running at capacity.

"We haven't had the time to plan for it, nor do we know when it will end. It is relentless and demand is still rising," Morrisons chief executive David Potts told reporters.

"If we just buy what we need then there will be enough of what counts for everybody," he said.

Britain's fourth biggest supermarket group said over the last two weeks there had been considerable stocking up and sales pull-forward as customers plan for the impact of the virus. That has driven a 5% year-on-year increase in retail like-for-like sales in the first six weeks of Morrisons' 2020-21 financial year.

The group has for the last 10 days imposed restrictions on customer purchases on 1,250 lines, most of them health related. This includes a limit of two packs of toilet rolls.

Shares in Morrisons were up 6.8% at 1016 GMT.

"We're putting the assets of the company at the disposal of the country," said Potts, pointing out that Morrisons is also Britain's biggest food manufacturer.

"Morrisons is facing squarely into the crisis and we will play our full part in feeding the nation during this important period," he said.

Morrisons said on Tuesday it plans to create 3,500 new jobs and expand its home delivery operation to help get through the coronavirus crisis.

It said last week it would pay its smaller suppliers within 48 hours to assist their cash flows.

Morrisons reported a 3% rise in pretax profit before one off items of 408 million pounds in the year to Feb. 2, bang on analysts' average forecasts. Revenue was down 1.1% to 17.5 billion pounds.

It deferred a decision on another special dividend payment due to the crisis.

Prior to Wednesday's update analysts were on average forecasting an underlying pretax profit of 432 million pounds for the 2019-20 year.

The firm did not issue any guidance for the new year but said it was operating from "a very robust financial position."

(Reporting by James Davey, Editing by Paul Sandle and Raissa Kasolowsky)