Product availability still recovering after tech outage, says Morrisons
The UK’s fifth-largest supermarket chain said its recent turnaround progress was ‘set back’ by the issue.
Morrisons has said the availability of products in its stores has still not fully recovered after a major IT systems outage before Christmas.
The UK’s fifth-largest supermarket chain said its recent turnaround progress was “set back” by the issue, which has caused weaker sales growth in recent months.
Boss Rami Baitieh said the company was unable to see its product availability and stock levels for four days after a cyber incident hit its technology supplier, Blue Yonder.
“We found a work around very quickly but our availability fell significantly and we very sadly let down some customers,” he said.
“The incident did set back our progress.
“Our availability is improving but it is not yet back to where it was before the incident, although product availability is still better than we were a year ago.”
Chief financial officer Jo Goff said Morrisons expects to recover costs caused by the incident as it seeks to make a claim with its insurers.
The group added that sales for the current quarter, which covered the key Christmas period, were positive but saw slower growth than the previous quarter.
It came after Morrisons’ sales jumped last year, with the supermarket saying it took market share from competitors and grew its loyalty card scheme.
The company said like-for-like sales rose 4.1% in the year ending October 27, while earnings jumped to £835 million from £751 million in the previous 12 months.
The annual results did not cover the key Christmas trading period, when Morrisons suffered IT issues of its own, causing delivery issues and forcing it to cut the price of items including turkeys and Champagne for some customers.
But the supermarket did show its best quarter since 2021 for the three months to October 27, when sales rose 4.9% compared with the previous year.
Morrisons, which has its headquarters in Bradford, West Yorkshire, and employs more than 100,000 people across the UK, has been owned by US private equity firm Clayton, Dubilier & Rice since 2021.
Mr Baitieh said: “This has been a year of urgent reinvigoration and positive progress for Morrisons.
“Customer transactions increased, market share grew from Q2 and we saw positive switching from our competitors.
“The improvements across the business have resulted in better availability in our stores, sharper prices, more effective promotions and a strong and growing loyalty scheme.”
It comes after Morrisons said it would axe more than 200 jobs as part of a cost-cutting plan, joining Sainsbury’s in reducing headcount in the months after the October Budget.
The move followed Mr Baitieh warning that supermarkets faced an “avalanche of costs” after Chancellor Rachel Reeves increased taxes for employers.
Morrisons was one of more than 70 businesses, including Tesco, Asda and Sainsbury’s, that told Ms Reeves in an open letter that the changes announced in the Budget mean price rises are a “certainty”.
It said changes to national insurance contributions would push its costs up £75 million a year from April, with an extra £10 million of costs expected due to the impact of the changes on third party partners, such as security staff in its shops.
