Morrison culls convenience stores

Chief executive David Potts - who only took charge of the company in March - said he wanted Morrison to be "an organisation that listens". He also admitted that the turnaround would take time and "require sustained investment", although management, customers and colleagues are apparently noticing improvements in the business already.

As part of his recovery plan, Mr Potts outlined what he called six new priorities. These include becoming more competitive, improving customer service and devolving more power to local branches. The aim to save £1bn in costs by the end of the 2016-17 financial year is also on track. Morrison clawed back another £189m in the first half, bringing total savings over the past 18 months up to £419m.

Morrison will receive a £25m cash injection as part of its convenience store exit, but it will incur a loss on disposal of £30m in the second half. It will also retain a guarantee on the individual lease obligations, which equates to a £20m contingent liability on the group's balance sheet in case the buyer's business fails. The grocer has been more fortunate with its other property disposals, which generated close to £100m in profit in the first half. Most of this, however, was offset by onerous lease provisions against the pipeline of new space worth £87m. Closing 11 supermarkets will cost Morrison £20m and will be put through the books as a one-off restructuring cost in the second half.

Analysts at Shore Capital have pencilled in pre-tax profit of £300m for the current financial year, giving EPS of 9.6p. This is down from £413m and 13.1p in full-year 2015.