The supermarket faces fierce competition and rising debt as it seeks to recover market share lost to discount rivals
Category: Business
In a challenging retail environment, Morrisons, one of the UK’s largest supermarket chains, has made the difficult decision to cut nearly 5,000 jobs as part of a broader strategy to stabilize its finances. This move comes as the company grapples with increasing competition from discount retailers like Aldi and Lidl, which have recently overtaken Morrisons in market share.
The cuts, which reduced Morrisons’ average monthly workforce from 101,144 to 96,232 employees, were detailed in accounts filed recently. The most substantial reductions occurred on the shop floor, where more than 4,200 positions were eliminated. Other affected areas included food manufacturing and distribution roles. These changes were largely attributed to the closure of the newspaper delivery service, restructuring within the retail team, and downsizing of the Rathbones bakery operations.
A spokesperson for Morrisons emphasized that the job reductions were not part of an additional redundancy program. Instead, they primarily resulted from not replacing employees who chose to leave. “Colleague numbers in the year ending October 2025 primarily reflects the impact of the closure of the newspaper home delivery service in convenience, the restructuring of the retail people team, and the downsizing of the Rathbones bakery business,” the spokesperson explained.
Morrisons is currently undergoing a major turnaround initiative under the leadership of Chief Executive Rami Baitieh. The company aims to regain its footing in a grocery market that has seen fierce competition. In recent years, discount chains Aldi and Lidl have gained ground, pushing Morrisons down to sixth place among the UK's largest grocers. This competitive pressure has contributed to the supermarket’s struggles to maintain its market share.
In the face of these challenges, Morrisons has reported a modest increase in revenue, which rose by 2.8% to £15.7 billion. This growth, albeit small, indicates some resilience within the company. Underlying earnings before interest, tax, depreciation, and amortization (EBITDA) remained stable at £835 million, demonstrating that the company has managed to maintain profitability in certain aspects of its operations.
Nevertheless, Morrisons' financial situation remains precarious. The supermarket revealed that its net debt climbed to £7.52 billion in the year ending October 2025, up from £7.07 billion the previous year. This increase in debt is compounded by rising store rental commitments and other financial pressures. The figures include lease liabilities and preference shares, with net debt excluding these items reported at £3.2 billion.
In addition to rising debt, Morrisons faced a pre-tax loss of £629 million before exceptional items. This loss was exacerbated by a cyber attack that disrupted IT systems just before Christmas 2024, impacting product availability during one of the busiest shopping periods of the year. The incident serves as a reminder of the vulnerabilities that retailers face in today’s digital age.
As Morrisons navigates these turbulent waters, the company is committed to implementing its turnaround plan. The goal is to recover lost market share and to adapt to the changing retail environment. Baitieh’s strategy includes improving operational efficiency and exploring new revenue streams, such as potential cash raises from its property portfolio. Recently, Morrisons held talks over a possible £600 million deal to sell and then lease back some of its stores.
The supermarket chain is also restructuring its business operations to streamline processes and reduce costs. This includes closing 100 former McColl’s stores, which have been rebranded as Morrisons Daily. Such measures are part of a broader effort to strengthen the company’s position in a highly competitive market.
Looking at the bigger picture, Morrisons has managed to grow like-for-like sales in every quarter of the year, which is a positive indicator of consumer demand. The company has also maintained its market share, even as it faces external pressures from rising inflation and government cost increases linked to tax changes.
“In our 2025 full year, we grew like-for-like sales every quarter, maintained EBITDA and our market share, and demonstrated our resilience in the face of some tough external headwinds,” the spokesperson stated. This resilience is particularly important as Morrisons seeks to stabilize its finances and improve its competitive standing.
As the supermarket continues to implement its turnaround strategy, stakeholders will follow closely closely to see if these efforts yield tangible results. The grocery sector is notoriously challenging, but with a solid plan in place, Morrisons hopes to reclaim its position as a leading player in the market.
With the retail environment constantly shifting, Morrisons’ ability to adapt and innovate will be key to its long-term success. The upcoming months will be telling as the company strives to overcome its current challenges and emerge stronger.