Morrisons’ woes continue as sales slide
MORRISONS’ like-for-like sales have dropped as it continues to battle with a competitive market.
The Bradford-based supermarket chain, which today reported its Q1 interim management statement for the 13 weeks to May 4, said that as anticipated, the market has continued to be competitive throughout the period. Total sales excluding fuel were down by 4.2% (down 5.6% including fuel) and like-for-like sales were down 7.1% (8.2% including fuel) – the “most serious warning sign for the grocer yet” according to a retail expert.
Phil Dorrell, director of Retail Remedy, said: “What’s the next level up from red alert? A like-for-like sales decline of 7.1% is the most serious warning sign for the grocer yet. Whatever Dalton Philips says about the supermarket’s plans being on track, Morrisons is well and truly off the rails. A lot is being pinned on the new ‘I’m cheaper’ initiative and the hope is that it will resonate with the man in the street.”
However, the group said Morrisons.com is performing ahead of its expectations and following a launch phase in Warwickshire and Yorkshire, on Monday the group will make its first deliveries in London. By the year end, Morrisons says its online business will reach up to 50% of UK households and is expected to account for more than £500m of annual sales.
In March, the group announced it had slumped to a £176m loss last year and in the same month, also announced plans to realise savings of £1bn over the coming three years. And last week, the group revealed it was slashing prices on more than a thousand of its products in a bid to win back customers, after facing months of poor sales and in response to the rising pressures of discount retailers such as Aldi and Lidl.
Today Morrisons said: “We continue to make good progress in all our strategic initiatives. The investment we have been making in our IT infrastructure and systems is on track, providing us with the platform we need to drive cost out of our business and deliver planned savings of £1bn over the next three years.”
During the quarter, the chain opened two core stores from its remaining pipeline as well as a further 11 M local convenience stores. The group said it is on schedule to meet its target of having up to 200 convenience stores open by the end of the year.
Morrisons said the financial position of the group remains strong with net debt of £2.8bn, in line with expectations.
Chief executive Dalton Philips said: “The plans we set out at our results in March are on track. The reaction of our customers to the 1,200 “I’m Cheaper” price cuts we announced last week has been very positive. Although it will take time for their full impact to be felt, we are confident that these meaningful and permanent reductions in our prices will enable our clear points of difference to resonate strongly with consumers.”
Morrisons said that whilst the trading environment remains challenging, its financial outlook for the full year of underlying pre-tax profit in the range of £325m – £375m, remains unchanged.
