Disappointing Christmas for Morrisons

Rachel Covill
9th January 2014
Thebusinessdesk.com
SUPERMARKET group Morrisons today unveiled disappointing sales as it said the Christmas period had been “very challenging” with a slowdown in market growth.
Morrisons said hard pressed consumers elected to economise and managed their budgets very tightly, buying less and shopping selectively across a range of formats and retailers.
In the six weeks to January 5 2014 total sales, excluding fuel, were down by 1.9% (3.3% including fuel) while like- for-like sales declined by 5.6% (7.1% including fuel).
The group said the difficult market conditions were intensified by the accelerating importance of the online and convenience channels, where Morrisons is currently under-represented, and by targeted couponing which was particularly prevalent in the market this Christmas.
“Although the strength of our unique supply chain and the commitment of our colleagues enabled us to maintain high standards of service and strong availability throughout this peak period, our sales performance was not as strong as we had planned,” the group said.
“The rollout of convenience stores continues at pace with 85 now open and with a target of 200 by the end of 2014/15. Our online food operation is ready to launch.”
Morrisons said its financial position remains strong and expects full year net debt to be in line with previous guidance of £2.7bn.
Chief executive Dalton Philips said: “In a very tough market our sales performance over Christmas was disappointing. However we are firmly focused on driving our core business and accelerating our penetration of the fast growing channels. Our convenience business is building towards an operation of scale and the first food deliveries will be made tomorrow, reaching half of UK households by the end of the year.”
The group said that whilst the sales environment continues to be very challenging, it has continued to manage the business very tightly.
“The board expects that our full year underlying profit performance will be towards the bottom of the range of current market expectations,” it said.