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Morrisons promises staff Covid-19 pay and expands Amazon home delivery

Oscar Williams-Grut
Senior City Correspondent, Yahoo Finance UK
An Exterior view of Morrisons in London. (Dinendra Haria/SOPA Images/LightRocket via Getty Images)

Supermarket Morrisons (MRW.L) has announced a raft of new measures aimed at supporting staff through the outbreak of novel coronavirus and ensuring the country continues to eat during the national crisis.

The supermarket on Wednesday:

  • launched a ‘hardship fund’ for staff;

  • announced an expansion to its home deliver partnership with Amazon;

  • unveiled plans to hire 3,500 more staff

  • and said it would guarantee fast payment to suppliers.

“We expect the days, weeks and months ahead to be very testing and we are determined to do our bit,” chief executive David Potts said in a statement.

Morrisons Chief Executive David Potts. (PA/Morrisons)

Morrisons said it would guarantee pay for any staff who are sick or otherwise affected by Covid-19. The supermarket group also plans to offer staff more flexibility with shifts and holidays, and has launched a “hardship fund” for staff “struggling to make ends meet” as a result of Covid-19.

Beyond staff, Morrisons will also pay its suppliers immediately to ensure no small business in its supply chain runs into cashflow trouble. Usually, businesses can wait as long as 90 days to have invoices paid.

The supermarket is also expanding a grocery home delivery partnership with Amazon to cover 100 stores. Morrisons first began working with Amazon’s Prime Now service in 2016 and deepened the partnership last year.

Read more: Sainsbury's places grocery restrictions per customer

Wednesday’s expansion will see Morrisons launch a new call centre to take grocery orders from those who can’t shop online and the launch of new “food parcels” designed to give people everything they need.

Morrisons will also recruit 3,500 extra staff to pick and deliver orders during the expected surge in delivery ordering.

“We are currently facing unprecedented challenges and uncertainty dealing with Covid-19,” Morrisons chair Andrew Higginson and chief executive David Potts said in a joint statement.

“Looking after our colleagues and customers is our priority, ensuring that we have a clean, safe place to shop and work.”

Empty shelves at a Morrisons supermarket in Whitley Bay on Monday March 16, 2020. (Owen Humphreys/PA Images via Getty Images)

Clive Black and Darren Shirley, retail analysts at Morrison’s house broker Shore Capital, said in an investment note on Wednesday they “absolutely applaud the way that Morrison has sought to be socially responsible around its stakeholders”.

Details of the new measures came as Morrisons published its full-year results. Total revenue fell by 1.1% to £17.5bn in 2019, but pre-tax profit rose by 3% to £408m. The numbers were roughly in-line with forecasts.

Morrisons said there had been “considerable stocking up” by customers during the last two weeks, helping sales jump 5% over the last six weeks. Morrisons’s announcement came as rival Sainsbury’s (SBRY.L) began introducing restrictions on customer buying to alleviate in-store shortages.

Morrisons said it had decided against announcing a special dividend alongside today’s results, as investors had expected.

“Instead, during the usual process of reviewing capital allocation, we determined it would be prudent to defer the decision given current unprecedented events around Covid-19,” the group said.

“This gives us maximum future flexibility around how we prioritise uses of our strong cash flow, and we will keep our capital allocation options under review.”

Shares rose as much as 11% after the open in London but tailed off to trade up around 5% by 8.45am GMT.

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