Morrisons delivers second quarter of sales growth

First-quarter sales grew 0.7% at Morrisons. Picture: Lisa Ferguson
First-quarter sales grew 0.7% at Morrisons. Picture: Lisa Ferguson
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Morrisons, the third biggest supermarket group operating in Scotland, has struck its second consecutive quarter of same-floorspace sales growth after a patchy four years of revenue reverses and stagnation.

Chief executive David Potts, who has been trying to steer a turnaround in the group’s fortunes over the past year, unveiled a 0.7 per cent lift in sales on Thursday for the first trading quarter despite food deflation of 2.6 per cent.

A highlight of the latest results at Morrisons, which has about 60 large Scottish stores, was a 17 per cent jump in sales at its Food To Go division.

Potts said the retailer was “encouraged” by the overall progress. “We are, of course, pleased with a second consecutive quarter of positive like-for-like sales, which demonstrates our aim to stabilise trade is taking effect,” he said.

“We are stabilising Morrisons and selling more things to more customers. It’s the first important step to fix, rebuild and grow this company.

“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.”

Ed Bowsher, senior analyst at Share Radio, commented: “Boosting like-for-like sales by 0.7 per cent is impressive when prices fall by 2.6 per cent. ‘Food-to-go’ items like sandwiches and crisps have also done really well. David Potts is a very experienced retailer and he’s clearly making a positive impact.”

Morrisons, which trails UK market leader Tesco, Sainsbury’s and Asda in annual sales, has been particularly hit by the rise of discounter supermarkets Aldi and Lidl, and has recorded losses or falling profits for four years running.

But, having now posted two successive quarters of like-for-like sales growth, City analysts said yesterday that the group was now on track for profit growth in its current financial year.

On an underlying basis, excluding any one-off items, the City consensus is for Morrisons to make a pre-tax profit of £318 million in its current financial year. That would be up from £302m in 2015/16.

The sales growth at the group in the 13 weeks to 1 May followed a 0.1 per cent like-for-like rise in sales in the previous three months as the recovery momentum accelerated slightly. However, it said it expected deflation to persist throughout 2016.

Potts wrongfooted the markets in March when he announced a wholesale supply deal with US electronic retailing giant Amazon.