Morrisons suffers miserable Christmas

Sales drop 2.5% over the festive period as recession hit customer spending in its northern heartlands

Sales at supermarket chain Morrisons slumped over Christmas, as the recession hit customer spending in its northern heartlands.

The Bradford-based grocer said like-for-like sales dropped 2.5% in the six weeks to 30 December, which is likely to be the worst Christmas trading of the supermarket groups reporting this week. The group said: “The environment over the Christmas period has continued to be challenging with hard pressed consumers increasingly shopping to a budget.”

Even within these difficult market conditions, Morrisons said trading was “disappointing”. Chief executive Dalton Philips admitted sales were lower than the company had anticipated, although they were in-line with analysts’ most recent forecasts.

The company avoided a profits warning – which some analysts had predicted – saying on Monday that it expects full-year performance to remain in-line with expectations and its financial position remains strong.

Morrisons is being left behind as the rock bottom prices offered by the discounters, such as Aldi and Lidl, steal its traditional no-frills formula. The chain, which does not yet have a grocery website, has also been hit by a growing number of people doing their weekly food shop online.

James Grzinic of house broker Jefferies said last week: “We expect hard discounters to have experienced a disproportionate improvement in market share over Christmas, particularly in the North of England. Secondly, more affluent consumers’ migration to online shopping seems to have accelerated over the festive season.”

Total sales at Morrisons over the period, excluding fuel, dropped by almost 1%. The company expects to have net debt at the end of the financial year of £2.1bn-£2.2bn. It is now hoping an advertising tie-up with entertainment duo Ant & Dec will revive its fortunes.

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