Will You Regret Selling Wm. Morrison Supermarkets?

LONDON -- According to the Met Office, it's been the coldest spring for over 50 years -- since 1962, to be exact. And the fifth coldest since records began, back in 1910.

We've seen some of the obvious causalities already. Yesterday, Kingfisher -- owner of DIY and gardening chain B&Q -- reported profits down 30%, blaming weak consumer confidence and bad weather.

In April, Punch Taverns blamed bad weather for a poor set of half-year results. And at around the same time, bakery chain Greggs blamed the second-wettest year on record for falling sales and profits. Greggs' chief executive Roger Whiteside -- formerly at Punch -- must wonder what has hit him.

And next? You don't have to be Einstein to figure out that fairly soon, we're likely to hear a similar tale of woe from camping, cycling, and car-DIY chain Halfords.

Bad weather ahead
What's to blame for all this bad weather? The jet stream. And looking ahead to the summer, it's already much further south than it should be at this time of year -- just like in the last two dismal years.

In other words, we could be in for another miserable summer. And I reckon that there's a sporting chance that such a summer could adversely impact the oh-so-slow turnround at Wm. Morrison Supermarkets .

As I've written before, it's a share that I'd like to buy, as I reckon the business is undervalued. My worry: it could get even cheaper.

From a share price perspective, Morrison has underperformed the FTSE 100 by almost exactly 25% over the last 12 months, and now trades on a prospective price-earnings ratio (P/E) of 10.7 -- well below the 13.3 P/E of the broader FTSE 100 as a whole.

And, as my colleague David O'Hara has recently observed, that share price is currently getting considerable support from its forecast dividend yield of 4.5%.

Yes, Morrison is finally addressing some of its strategic misjudgements of recent years. It has long been criticised for not offering online sales, for instance. Well, this month we've seen that corrected, with the launch of a tie-up with Ocado.

In convenience stores, too, the business is finally playing catch-up, in a game where the market leaders have a significant head start.

Soggy shoppers
Compared to those market leaders, a prolonged cold, wet summer could show up Morrison's greatest vulnerability: until the Ocado tie-up kicks in, it is a uniquely footfall-driven U.K.-centric grocery retailing business model, dependent on physical shoppers buying physical goods.

No banking and personal finance offerings, no home furnishings catalogues, no stores in far-off sunny Asia, and no "bolt-on" telecommunication packages and other brand extensions.

As such, sales could slump if British shoppers spend summer on the sofa, rather than in the garden with Morrison-bought beer and barbecue products, sitting on Morrison-bought plastic chairs and garden loungers.

So, is it time to sell -- and buy back in later, after the summer's weather has done its worst?

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That, of course, is something that only you can decide.

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The article Will You Regret Selling Wm. Morrison Supermarkets? originally appeared on Fool.com.

Malcolm Wheatley owns shares in Greggs and Tesco, but not in any other company mentioned here. The Motley Fool owns shares in Tesco. The Motley Fool recommends Halfords Group. The Motley Fool owns shares of Halfords Group. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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