{"id":57370,"title":"Morrisons faces persistent debt challenge despite sales growth","publisher":"Stockmark.IT","author":"Stockmark.IT Website","published":"2026-08-23T06:36:12+00:00","modified":"2026-08-23T06:36:12+00:00","canonical_url":"https://stockmark.it/can-debt-ridden-morrisons-become-a-big-four-supermarket-again/","markdown_url":"https://stockmark.it/can-debt-ridden-morrisons-become-a-big-four-supermarket-again.md","json_url":"https://stockmark.it/can-debt-ridden-morrisons-become-a-big-four-supermarket-again.json","category":"Companies","categories":["Companies","Financial","Supermarkets"],"featured_image":"https://i0.wp.com/stockmark.it/wp-content/uploads/2026/08/morrisons-faces-persistent-debt-challenge-despite-sales.png?fit=1536%2C1024&quality=80&ssl=1","format":"news","language":"en-GB","content":"Morrisons has reported a pre-tax loss of £629m for the year to last October, a result that extends its ongoing struggle to return to profitability despite a 2.8 per cent increase in sales. The supermarket, which has seen its market position eroded by discount rivals, is now weighing up the sale of an additional £1bn worth of its property portfolio to manage its substantial debt burden. This move comes as the retailer attempts to stabilise its financial position under the leadership of chief executive Rami Batiéh, who has been at the helm since November 2023.\n\nThe group’s net debt, a critical metric for its long-term viability, rose from £7.1bn to £7.5bn in the year to last October. Although Batiéh has reduced this figure by approximately 46 per cent since taking charge, the scale of the liability remains a significant hurdle. The supermarket is considering selling off further assets to keep this debt down, following previous disposals to investors including Blackstone and the Saudi sovereign wealth fund. Retail analyst Catherine Shuttleworth described the turnaround as slow and difficult, noting that the group’s cost-cutting measures have reached their limit and are beginning to impact store standards and product availability.\n\nThe financial pressures have been accompanied by significant workforce reductions. Morrisons shed nearly 5,000 jobs over the past year, with its average monthly workforce falling to 96,232 people. This represents a five per cent year-on-year decline and a 15 per cent decrease since the year to October 2022. A spokesperson for the grocer stated that these job losses reflect the closure of its newspaper home delivery service, the restructuring of its retail people team, and the downsizing of its Rathbones bakery business. The company clarified that there was no additional redundancy programme in stores, with numbers reduced only by not replacing staff who had chosen to leave.\n\nA significant factor in the pre-tax loss was a write-down in the value of McColl’s, the convenience chain acquired for £190m in 2022. In May, Morrisons announced it would close 100 of the 1,100 stores it acquired in that deal. The group attributed this decision to significant cost increases resulting from government policy choices, which it said made returning the stores to profitability more difficult. Despite these losses, Morrisons is keen to expand its presence in the crowded convenience market, having opened 30 new smaller ‘Daily’ stores earlier this summer with plans for hundreds more in the coming years.\n\nHowever, the retailer faces intensifying competition from other major players. Asda, which is also owned by private equity, recently announced it is trialling a new partnership scheme with independent corner shops, adding to its existing network of more than 500 Express stores. Meanwhile, Morrisons is grappling with a growing rent bill as it considers selling freehold rights to its stores and renting them back. Its lease liabilities, representing future rent payments, grew to £2bn in the last year, up from £1.8bn the previous year and £1.2bn in 2022.\n\nMarket share rankings show that Morrisons has lost ground to German discounters Aldi and Lidl in recent months. Nicholas Found of Retail Economics acknowledged that Batiéh has made genuine progress by returning to fundamentals around price, availability, and fresh food, noting that sales have grown consistently and market share has begun to stabilise. However, he warned that the sheer pace and scale of competition from Lidl and Aldi, which are dominating the mid-sized grocery market, pose a major challenge. Found added that the supermarket’s continued losses and heavy debt pile constrain its ability to invest aggressively to close the gap with its rivals.\n\nIn response, a Morrisons spokesperson highlighted the company’s resilience in the face of tough external headwinds, including the cyber incident, rising inflation, and government cost increases. The spokesperson stated that debt and interest costs were both reduced and that the underlying performance of the business was robust, with the company continuing to generate healthy underlying earnings and strong operating cashflow."}