UK supermarket Morrisons says work on pricing and loyalty paying off
New CEO Rami Baitieh joined in November
Q1 like-for-like sales, ex-fuel/ex-VAT, up 4.1%
H1 underlying EBITDA, excluding fuel business, up 16%
Net debt reduced to 4 billion pounds
Adds detail paragraphs 4 to 6 and paragraphs 9 to 11
By James Davey
LONDON, June 25 (Reuters) -British supermarket group Morrisons said on Tuesday its new CEO's strategy to improve price competitiveness and develop a loyalty programme was working as it reported a 4.1% rise in quarterly underlying sales.
Former Carrefour France boss Rami Baitieh joined Morrisons in November last year and in January said its performance was not good enough.
A scheme to price match discounters Aldi and Lidl on key items introduced in February "has had a great start", he said, while customer reaction to Morrisons' investment in its 'More Card' "has been very positive".
Transactions using the loyalty card have risen to 50% and Morrisons is now targeting 70% of transactions to be through it over the medium term.
Baitieh also said he was aiming for a total of 2,000 convenience stores in 2025, up from more than 1,600 currently.
However, monthly industry data last week showed Morrisons continuing to lose market share and underperform the sales growth of market leader Tesco TSCO.L and No. 2 Sainsbury's SBRY.L.
Morrisons, owned by U.S. private equity firm Clayton, Dubilier & Rice (CD&R) since 2021, said underlying earnings, excluding its fuel business, increased 16% to 321 million pounds ($408 million) in the six months to April 28.
In January, Morrisons agreed a 2.5 billion-pound deal to sell 337 petrol forecourts to Motor Fuel Group, which is also owned by CD&R.
Morrisons differs from its main rivals in that it also has its own production operations and makes half of the fresh food it sells.
Since its purchase by CD&R, Morrisons has been hamstrung by debt. It said net debt was now 4 billion pounds, down 35% from a peak of 6.2 billion pounds.
The group said it cut costs by 78 million pounds in its February to April second quarter, taking the total since the start of this year to just over 450 million pounds, in line with its 700 million three year target.
($1 = 0.7874 pounds)
Reporting by James Davey; editing by Sarah Young and Alexander Smith
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