Morrisons says weak quarterly figures are down to distortion caused by sales boosted by Royal Wedding and warm Easter
Morrisons has blamed its weakest quarterly figures since the takeover of rival Safeway in 2004 on the distortion caused by bumper sales last year when an exceptionally warm Easter and celebrations surrounding the Royal Wedding boosted sales.
Like-for-likes sales fell 1% in the 13 weeks to 29 April and some analysts are worried the Bradford-based grocer is being outgunned by resurgent larger rivals Tesco and Asda. Its chief executive Dalton Philips was “satisfied” with the performance and pointed to the “challenging” consumer backdrop as higher food and fuel prices eroded household spending power.
Morrisons has not worried shareholders since the huge problems it encountered in the wake of its £3bn takeover of rival Safeway in March 2004 which culminated in its first ever loss two years later. Since then it has performed strongly but without a weak link in the big four – last month Tesco announced plans to invest £1bn in its UK chains – some analysts fear it is getting caught in the middle.
Shore Capital analyst Clive Black said the figures were “disappointing” and “in a nutshell” it was losing shoppers to Asda. Taking food inflation into account sales volumes were potentially down by up to 5%, he said. With no internet home delivery service and just a handful of convenience stores, Black said the grocer had “virtually no access to the few areas of growth in the market”.
Philips has been testing so called “fresh labs” in its supermarkets for the past 18 months and has now remodelled 31 stores, introducing much larger fresh produce displays as well as seafood counters and one-offs such as a sushi bar or patisserie. The changes were creating a point of difference in it stores in what Philips said was an increasingly “commoditised” grocery market. The shares closed down 3.5p, more than 1%, at 276.5p.