What Does The Supreme Court’s Ruling Hold For Morrisons On Data Leak Case?

The United Kingdom's Supreme Court ruling in favour of Morrisons stated that the company cannot be held liable for an employee's actions with a resentment that leaked the payroll data of nearly 100k staff members. In an effort to overturn previous decisions, the grocery chain brought a lawsuit to the Supreme Court requiring it to pay thousands of employees whose personal information had been posted on the internet. A five-judge jury has now unanimously determined that the actions of the former auditor Andrew Skelton will not hold the supermarket chain responsible. In January 2014 Skelton received the payroll data for the 98,998 Morisons employees. He also sent anonymous CDs that included a vast amount of employee details, including names, addresses and birthdates, to different media houses. Skelton was previously convicted with an 8 year prison sentence for this criminal act. During an internet streaming session, a Supreme Court decision was released in which President Lord Reed said after receiving a verbal warning during the disciplinary hearings, Skelton was leaking the data. The judge said employers should only be held responsible for employee actions if they are directly linked to their work nature of responsibilities.

How did Morrison’s management reacted to the ruling?

The supreme court ruling annuls the earlier High Court and Court of Appeal decisions which deemed the supermarket chain responsible for Skelton's activities. It has important consequences for data security, with previously worried companies that the case of Morrisons could set a precedent requiring delinquent workers to pay for future acts. Morrisons claimed that if would have lost the case, despite being "entirely blameless," the company would have been exposed to lawsuits for compensation on a potentially large scale.

Morrisons later released a ruling stating that the data theft occurred because a single employee with legal rights to keep the data was having a deep and completely irrational resentment against the company and wanted to harm it and the employees working for it. The statement also mentioned that the management of the company is completely satisfied that the Supreme Court decided that they would not be held responsible for a single person’s poor judgement and conduct while acting alone, with his own criminal scheme, and that he was found guilty of this crime and spent time in jail.

The company’s statement also mentioned that they did understand that several employees appreciated how easily we had the data taken down, covered their bank accounts and reassured them that they would not be financially affected in any circumstances.

Business Overview

WM Morrison Supermarkets Plc (LON:MRW) is a British corporation engaged in operating retail superstores in the United Kingdom. The company was founded in 1899 by Sir Ken Morrison and is headquartered in Bradford, the United Kingdom. The company went public in 1967. After thirty-five years since going public, the company became a part of the FTSE 100 index for the first time in April 2001. Through the online portal, the company covers 11 million households. The company’s operating segments include in-store and online home delivery grocery retailing business, serving consumers across the UK through almost 500 stores. The company offers a famous range of products such as Free From, World Foods, Food to Go among others, sources and processes most of the fresh food that it sells through its manufacturing facilities. It operates from over ten manufacturing sites spread across Britain with over seven regional distribution centres and a national centre servicing its supermarkets and runs through 491 stores, and 334 petrol filling stations. The company is also engaged in manufacturing and distributing fresh food, preparing and supplying seafood, processing fresh meat. It is involved in investing in, developing and maintaining properties, as well as offering insurance and leasing services. The company also holds a pharmaceutical license.

MRW Brief Financial Highlights

Recently, WM Morrison Supermarkets Plc had announced its final results for the period of 52 weeks ended 2 February 2020, in which it was reported that the total revenue was down 1.1 per cent year on year to £17.5 billion. It was also highlighted that the Profit before tax and exceptional expenses for the reporting period was up by approximately 3.0 per cent to £408 million. The Statutory profit before tax for FY 2020 has also been reported to have gone up by 43.6 per cent year on year to £435 million. The company reported that the Net debt as on 2 February 2020 came in at £2,458 million compared to £2,394 million as at the end of the previous financial year.

MRW Stock Price Performance

Source: Thomson Reuters, on 02-04-2020 before the closing of the London Stock Exchange Market

As on 3^rd April 2020, at 08:15 A.M Greenwich Mean Time, at the time of writing this report, the WM Morrison Supermarkets Plc share was hovering at a price of GBX 180.35 on the London Stock Exchange market, stronger by approximately 0.75 per cent or GBX 1.35, in comparison with the price of the share on the previous trading day, which had been reported to be at GBX 179.00. As of the time of reporting, the share of WM Morrison Supermarkets Plc was reported to have been trading 14.47 per cent above the 52-week low share price, that was GBX 157.55, the company set this price on March 17, 2020. At the time of writing, the share of the company had been trading 19.75 per cent down than the 52-week high price of GBX 224.73, that the company registered as on April 04, 2019. As of the time of reporting, the market capitalisation of WM Morrison Supermarkets Plc has been reported to be at a value of GBP 4.305 billion, with respect to the current trading price of the company’s share.

The WM Morrison Supermarkets Plc share had given a negative return of around 21.59 per cent in value, in the previous one year, since April 03, 2019, when the share was trading at a price of GBX 230.00 at the time of the close of the market. The share has given a negative return of around 6.55 per cent in value in the previous six months from the price of GBX 193.00 at the close of the market on October 03, 2019. The company’s share had also given a positive return of approximately 2.41 per cent in value in the previous one month since the close of the market on March 03, 2020, when the price of the share was reported to be at GBX 176.10 per share.

The beta of the share of the company was reported to be at 0.43 when this report was being written. This points to the fact that the movement of the company’s share price is less volatile, in comparison with the movement in the price of the comparative benchmark index.

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