Morrisons share price drops as analysts warn of industry-wide shakeup

YORKSHIRE supermarkets are facing an escalation in the grocery wars after share prices dropped yesterday.

Morrisons’ share price dropped by 6.75% yesterday, with HSBC analysts rating the Bradford-based as “reduce.”

More than £1.6bn was wiped off the value of Tesco, Sainsbury’s and Morrisons combined, with suggestions that the market jitters were down to changes at Asda.

The Walmart-owned giant announced last month that it would be getting a new chief executive in the form of global executive Sean Clarke .

Before this, Walmart head of international operations indicated that the business would be willing to take a hit on profit margins to cut prices, putting sales volumes above profits.

HSBC analyst David McCarthy said: “If Asda decided to invest half its margin into price, a competitor reaction could wipe out almost all industry profitability and would force an industry restructure.

“We believe there are signs that Asda may be about to fundamentally reposition on price, bringing down sector profits.”

By the end of June, Morrisons’ sales fell by 2.4%, reflecting the ongoing impact of store disposals, whilst at Asda they were down by 5.9% according to results from Kantar Worldpanel.