Morrison sales drop worsens
Britain's Morrison supermarkets reported a worsening sales decline over the key Christmas period as the growth of discounters such as Aldi led to an erosion of market share.
Sales at stores open at least a year fell 2.5 per cent in the six weeks ended December 30, the Bradford, England-based company said today in a statement, reporting figures on a basis that excludes fuel and value-added tax.
The sales decline is "a clearly very disappointing figure for its management and investors alike," said Clive Black, an analyst at Shore Capital in London with a sell recommendation.
"We believe that the business has lost touch with some of its core customers, but not attracted new ones."
Morrison, whose stores are mostly located in the north of England, has lost shoppers amid a shift by cash-strapped consumers toward discount formats and online.
The grocer needs to "shout" about specialist areas such as in-store fishmongers and offer more effective promotions to turn around sales, chief executive officer Dalton Philips said on a conference call.
Morrison rose as much as 1.4 per cent to 260.4 pence in London trading as the company said its financial performance for the year ending this month will be "in line" with its own expectations, allaying concern that it may lower guidance.
The consensus estimate for underlying pre-tax profit is about £913 million (€1.12 billion), finance director Richard Pennycook said.
"We've been working the business hard, keeping things very tight all year and you'll have heard me say on Christmas trading statements before, they are not make or break for the whole year as they are for other retailers like fashion," Mr Pennycook said.
Sales were lower than anticipated, chief executive officer Dalton Philips said, citing the "accelerating importance" of the online and convenience areas, where Morrison trails the market.
The grocer is "looking very closely" at online food operations, he said, adding "we like what we've seen so far."
Morrison's market share slid to 11.7 per cent in the 12 weeks ended November 27, from 12.3 per cent a year earlier, according to researcher Kantar Worldpanel.
Its Christmas performance is expected by analysts to trail growth at larger competitors Tesco and J Sainsbury, both of whom are scheduled to report later this week.