Morrisons declares £1bn supermarket price war

Chief executive Dalton Philips vowed to throw £1bn into cutting prices after revealing a £176m pre-tax loss for the past year.

17:24 14 March 2014

Dalton Philips, the chief executive of Morissons, has stated that the competition from discount grocers Lidl and Aldi have thrown the supermarket industry into its biggest crisis since its birth in the 1950s. This follows his admission that the company suffered £176 pretax loss for the past year.

He said: "Today is an important day. We are facing some big structural changes and it is the biggest challenge facing the industry since the 1950s and the advent of the supermarket."

Jon Copestake, a retail analysts at the Economist Intelligence Unit, said:

"Morrisons are seeking to recognise the impact of discount channels [but] tighter margins and lower prices will dent profitability and could undermine some goodwill towards the brand.

"There is also a risk of price wars with the likes of Aldi and Lidl that could prompt a damaging race to the bottom."

Darren Shirley at Shore Capital warned: "Other supermarkets cannot stand idly by and let a competitor steal a march and so for Asda and Tesco in particular there may be concern as to what Morrisons is doing. The scope for contagion on the pricing front is high.”