Morrisons has "stopped the rot" as recovery gathers pace

THE impact of supermarket closures and exit of the M local chain have affected Morrisons’ bottom lines but chief executive David Potts is optimistic after an increase in like-for-like sales.

In the 13 weeks to 1 May, like-for-like sales excluding fuel were up 0.7% (up 1.2% including fuel) which continues an upward trend for the grocer.

Earlier this week Morrisons announced that it would cut the prices of more than 800 everyday items as part of its Price Crunch campaign.

This, along with the Amazon tie-up announced earlier this year has led analysts at Retail Vision to say: “Hats off to David Potts, he appears to have stopped the rot.

“Lower prices and the well marketed ‘Morrisons Makes It’ programme has stemmed the haemorrhaging of customers to Aldi, Lidl and ASDA.”

However total sales excluding fuel were down 1.8% (down 0.9% including fuel).

The business has also seen a “significant” increase in Food to Go, but it said that new express and self checkouts had impacted on items per basket, which were down 2.8% in the quarter.

The ‘Morrisons Makes It’ programme which aimed to highlight the grocer’s food maker and shopkeeper credentials was launched in the quarter.

David Potts, chief executive, said: “We are encouraged by progress across our six priorities. There is still much to do and our colleagues are working very hard to improve the shopping trip and save customers every penny we can.

“Customers are responding and satisfaction levels remain ahead of last year. We are of course pleased with a second consecutive quarter of positive LFL sales, which demonstrates our aim to stabilise trade is taking effect.”

John Ibbotson of the consultants, Retail Vision, said: “Potts’ strategy of taking on the discounters with the Price Crunch initiative, and establishing Morrisons once again as a value retailer, is clearly working.

“The once beleaguered grocer is finally moving in the right direction, although we should not hide from the fact that there is still a long way to go.

“Sales may be up but against a backdrop of intense competition, lower margins and lower returns on capital, a return to the sales increases of yesteryear is unlikely… but by returning to the basics of low prices, great value and fresh food Potts has injected new life into its model.”

 

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