Morrisons shares down after more store closures and job losses: can the supermarket survive?

http://www.independent.co.uk/news/business/news/morrisons-shares-down-after-more-store-closures-and-job-losses-can-the-supermarket-survive-10494609.html

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Morrisons shares were down 3.4 per cent on Wednesday morning following the company’s decision to close 11 UK stores at the expense of 900 UK jobs. Just 12 hours earlier, Morrisons said it was selling off all M Local stores, exiting the convenience store market, as it battles a pre-tax loss of 47 per cent.

Chief executive David Potts said the stores had become "part of the problem rather than the solution". But analysts are still unsure that closing so many stores is the answer.

"Trading has always been the priority of Morrisons; and as yet there is no sign of i¬mprovement. It is still unclear how they will compete on price against Aldi, Lidl and Asda and on service against Sainsbury's or Tesco. Until we see the first signs of a retail proposition, that has consumer appeal and that has been well costed, we do not anticipate margin improvements at the true underlying level."

"This is a retailer that is ripe for takeover. Although Potts is doing everything in his powers to turn it around, Morrisons' problems are almost certainly too deep-seated. Swinging the axe on his executive board, culling 720 head office jobs, hiring 5,000 additional shop floor staff and reducing prices is clearly not enough to bring his cost base in line with the low cost discounters, Aldi and Lidl. Having a high cost internet operation run by Ocado doesn’t help either."

"Morrison has strong value credentials that can be underpinned and augmented by progressive improvement in ranging, merchandising and the store experience. Re-engineering Morrisons is not rocket science but it remains a considerable challenge and opportunity."

"In all, and underlined by the new Chief Executive himself, the road to recovery still appears long. On balance, and weighing the group’s comparatively strong balance sheet against concerns that it remains the most exposed to German discounters Aldi and Lidl, analyst consensus opinion currently points towards a sell [on the stock]."