Morrisons - comment

The stabilisation of the top line at Morrisons is a positive, albeit one that has not been cheap. The £420m of cash raised from sales and leasebacks in H1 was utilised in supporting prices. There will be some further S&L in H2, but the pace will slow. With a cap rate of 7.1%, S&L makes a lot more sense than additional debt, and with c£8bn of freehold assets, Morrisons can afford to raise further cash, but it needs food inflation to normalise. Underlying EBITDA guidance for FY 2022.23 is reiterated as higher than last year, driven mainly by cost savings (£100m in H1 and £200m expected in H2). We are in the process of updating our model and will provide more detail very soon.