(Bloomberg) -- Morrisons’ profit rose as the UK grocer regained some ground in its battle with discount rivals to win over cash-strapped shoppers. 

Underlying earnings rose 6.5% in the year to Oct. 29, to £970 million ($1.2 billion), helped by improving customer satisfaction scores as the supermarket rolls out price cutting and loyalty initiatives. Like-for-like sales, a key sector benchmark, have improved six straight quarters.   

The report marks the first earnings update for Morrisons since ex-Carrefour France Chief Executive Officer Rami Baitieh took the top job last year, replacing David Potts. Morrisons has been one of the supermarkets hit hardest by soaring costs, losing its spot as the UK’s fourth-biggest grocer. 

“Since the pandemic, Morrisons has not been on peak form,” Baitieh said. “Market share has slipped slowly but consistently. Our like-for-likes, although on an improving and encouraging trend now, have been below the pack for a while and the switching data has not been encouraging.”

Morrisons was purchased in a highly leveraged deal by US private equity firm Clayton, Dubilier & Rice in 2021 and has struggled to keep prices as low as some competitors during Britain’s cost-of-living crisis.

The chain, founded by William Morrison in 1899 as an egg-and-butter stall in Bradford, England, still makes about half of the fresh food it sells and has its own slaughterhouses and meat-processing operations. That exposes it to higher food costs more than its rivals.

Customer Feedback

Baitieh said customers will be asked for opinions to drive improvements, and he listed examples of changes including in-store customer roundtable meetings and giving store managers more autonomy. 

The CEO has begun hosting online meetings with 100 key staff members six days a week to analyze store performance as well as customer and employee feedback, and he said his personal email is available for customers to send complaints. 

Morrisons on Tuesday announced a £2.5 billion deal to sell hundreds of gas stations to Motor Fuel Group, another CD&R-owned company. The transaction, which also sees Morrisons taking a minority stake in MFG, will allow it to gain buying scale and reduce debt, which has weighed on the grocer since it was de-listed. 

Read More: Morrisons Forms £2.5 Billion Gas Station Alliance With MFG 

 

 

(Updates with CEO from fourth paragraph.)

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