Morrisons slumps to £1.5bn pre-tax loss after private equity takeover

theguardian.com:

The supermarket chain Morrisons slumped to a £1.5bn loss during its first full year in private equity ownership, according to its latest results.

The grocery retailer was bought by the US private equity firm Clayton, Dubilier & Rice (CD&R) for £7bn in October 2021 after an intense bidding war.

The results for the period from late July 2021 to the end of October last year reveal the grocer’s struggles during the first year after it was taken private and delisted from the London Stock Exchange.

Morrisons – which employs more than 110,000 staff, including 95,000-plus working in its 500 supermarkets – made an operating loss of £58m before exceptionals for the 65 weeks to 30 October, according to a trading update from the chain’s parent company filed at Companies House.

A substantial portion of its £1.5bn pre-tax loss for the period was related to finance costs of £593m, which included interest payments on external debt, as well as interest on its lease liabilities and interest payable on loans to group companies.

The loss contrasts with the £201m pre-tax profit before one-offs made by the retailer made during its final year as a public company, on sales of £17.5bn.

The group’s latest results underline concerns about private equity takeovers, which often see businesses loaded with debt. Morrisons’ net debt obligations stood at £3.2bn before the CD&R takeover, and rose to reach almost £6bn after the acquisition, or £7.5bn if other obligations are included.

Morrisons lost its spot among the “big four” supermarkets last September when it was overtaken by Aldi, which became the UK’s fourth-largest supermarket chain after Tesco, Sainsbury’s and Asda.

Since the CD&R takeover, Morrisons has bought the struggling convenience store chain