Morrisons - comment
Morrisons had a good start to the year (to end Jan). Q1 sales +2.1% LFL, in contrast to the -4.2% at ASDA. The company has increased its cost-saving target by £300m. Management would have known about much of the cost headwinds mentioned in the statement, so we expect much of the additional savings will be used for price support. The additional £300m in savings will take time to flow to the bottom line, so we expect some margin reduction in H1. As with ASDA, there is a significant equity cushion underneath the debt stack, and we remain comfortable with the credit.