Wm Morrison Supermarkets PLC (LON:MRW) shares jumped on Wednesday as the food retailer said it has seen revenue surge as shoppers rushed to stock up due to coronavirus fears.

The FTSE 100-listed supermarket chain said yesterday it was taking on 3,500 extra staff to cope with the rush and today confirmed sales had taken off in the past two weeks from stocking up and ‘sales pull-forward’.

After being flat in the first four weeks of the current year, sales are now 5% higher than this time a year ago. Sales in the year to  2 February dropped by 1.7% to £17.5bn, while underlying profits rose by 3% to £408mln. Net debt rose to £2.46bn, while Morrison had cash equivalents of £305mln at the year-end.

However, Morrisons has scrapped a planned special dividend due to the uncertainty over how the effects of coronavirus will develop,

It also unveiled a range of measures to help those affected including immediate payment to suppliers, guaranteed sick pay for people who catch the virus and expansion of its online offering.

Reassuring set of numbers

Richard Hunter, head of markets at interactive investor, commented: “Morrisons has been focused on honing its financial health and the positive results are beginning to materialise.

“There is little question that the group finds itself in a strong balance sheet position, with its store portfolio 87% freehold, free cash flow of around £300 million and currently running a pension surplus. In addition, the decision to defer the special dividend is a prudent one, which will allow Morrisons extra flexibility in allocating its cash in these trying times. By the same token, such cautionary moves on company dividends are likely to become more commonplace over the next few months, with little of the negativity which would normally accompany any reduction of any dividend.”

However, he added: “Ferocious competition, particularly in the current environment, is likely to heighten and in the meantime, the company is still lagging its competitors with its online offering, which will become a useful weapon for those that have an established online presence. The ordinary dividend yield of just 2.2%, now without any special dividend, is not on the list of attractions for the stock at present.”

“For the most part, however, this is a reassuring set of numbers from Morrisons and the initial reaction to the results will be of some solace to long-suffering investors, Hunter concluded. 

In afternoon trading, Morrison’s shares were 10% higher at 199.35p.

 — Adds analyst comment, share price —