to a £1.5bn pre-tax loss.

After a private equity takeover, Morrisons declined to a £1.5bn pre-tax loss

According to the latest figures, grocery store giant Morrisons lost £1.5 billion during its first full year under private equity ownership, for the period from late July 2021 to the end of October last year.

In an intense bidding war, the US private equity firm Clayton, Dubilier & Rice (CD&R) bought Morrison in October for £7 billion.

After it was taken private and delisted from the London Stock Exchange, the data for the period from late July 2021 to the end of October last year reveals that the grocery giant struggled during its first year.

According to a trading update from the chain’s parent company filed at Companies House, with its 500 supermarkets, Morrisons employs more than 95,000 people out of its total of 110,000 employees, making an operating loss of £58 million before exceptional items for the 65 weeks to October 30,

The majority of its £593 million in finance expenses for the quarter, which included interest payments on external debt, lease liabilities, and loans to group units, was responsible for its £1.5 billion pre-tax deficit.

chief financial officer, Joanna Goff. Morrisons described this cost as almost equal to the amount paid out in annual dividends and interest when the chain was a listed company. the annual interest charge on the company’s debt to the tune of almost £400 million.

According to current knowledge, the group’s debt will not need to be refinanced until 2027.

In contrast to the £201 million pretax profit the business generated on sales of $17.5 billion during its final year as a publicly traded company, Morrisons’ loss stands at £1.5 billion.

The latest findings of the group shed light on concerns regarding private equity takeovers, which frequently result in debt-laden enterprises. There were £3.2 billion in net debt commitments when CD&R took over. These debts increased after the acquisition to around £6 billion, or £7.5 billion when extra liabilities are taken into consideration.

Aldi became the UK’s fourth-largest supermarket chain after Tesco, Sainsbury’s, and Asda after overtaking Morrisons, which lost its spot among the big four supermarkets last September.

After the takeover by CD&R, Morrisons outbid the owners of Asda in the race to acquire the struggling convenience store chain McColl’s out of administration, which it announced last May.

Recently, the company closed 132 unprofitable McColl’s retail stores out of the 1,164 it acquired, laying off 1,300 staff.

The chief executive of Morrisons, David Potts, stated the business, whose history can be traced back 124 years, was “combining well with CD&R to be more effective” and was on course to earn additional revenue in 2023 after “a year of transition.”

In a late January trade report, Morrisons stated that like-for-like sales, excluding fuel, had increased by 2.5% over the three weeks leading up to Christmas and that sales momentum had carried over into the new year.

- Published By Team Timeswire

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