Sales down during ‘challenging’ trading period for Morrisons

Bradford-headquartered supermarket chain Morrisons has today reported continued customer uncertainty in its latest trading update.

For the first 22 weeks of the second half to 5 January, Group like-for-like (LFL) sales excluding fuel were down 1.7%, comprising contributions from retail of (1.7)% and wholesale of 0.0%.

Group LFL including fuel was down 2.8%, while total sales for Morrisons were down 1.8% excluding fuel (down 2.9% including fuel).

For quarter three (the period 5 August to 3 November), LFL excluding fuel was down 1.2%, comprising contributions from retail of (1.1)% and wholesale of (0.1)%.

Group LFL including fuel was down 2.5%. Total sales were down 1.3% excluding fuel (down 2.6% including fuel).

The supermarket’s update explains: “Throughout the period, trading conditions remained challenging and the customer uncertainty of the last year was sustained.

“We stayed focused on our priorities and our customers, and continued to invest in the Morrisons price list while managing costs well. Our basket of key Christmas items was once again very competitive, with most prices the same as or lower than last year. In fuel, our business was affected by a highly promotional market.

“In wholesale we were pleased to grow sales with most of our customers, but overall LFL growth was impacted by the lower total sales at McColl’s, as previously reported by McColl’s for the period up to 24 November. 

“Sales at the first ten conversions from McColl’s to Morrisons Daily convenience stores are strong, and together we plan to extend the trial to another c.20 stores during January and February.”

“During the period, we opened four new stores (including two replacements), closed four underperforming stores, and launched another 25 Fresh Look stores bringing the total to 44 this year.”

David Potts, chief executive, said: “It was encouraging that during an unusually challenging period for sales, our execution was strong and our profitability robust, demonstrating the broad-based progress we have made during the turnaround.

“This was again down to the hard work of Morrisons’ exceptional team of food makers and shopkeepers. As always, we will take some learnings into the new year, and look forward to 2020 with a strong plan and solid foundations on which to continue to grow.”

Commenting on Morrisons’ latest trading update, Richard Lim, CEO of Retail Economics, said: “Festive cheer was not shared with the retailer as shrinking sales demonstrate the fiercely competitive food sector.

“These figures suggest the retailer was outmanoeuvred by their competitors. Shoppers remained fixated on searching for the best value and highly price-sensitive against the backdrop of ongoing uncertainty.

“Despite the pressure on margins, the industry remained stuck in a spiral of continual discounting with the depth and breadth of promotions snowballing in the run-up to Christmas.

“Nevertheless, a firm grip on costs offset some of the decline in sales to deliver profitability in line with previous expectations.”