Morrisons and Tesco sales hit by budget rivals

Lidl and Aldi have made gains as customers seek value. Picture: Greg Macvean

Chief executive Dalton Philips revealed that a 5.6 per cent fall in like-for-like sales in the six weeks to 5 January was much worse than expected and followed rival Sainsbury’s posting a meagre 0.5 per cent rise in Christmas sales on Wednesday.

The malaise also hit Tesco, Britain’s biggest supermarket group, which today said its bigger stores had suffered as its same-floorspace sales fell 2.4 per cent in the six weeks to 4 January.

Discounters Lidl and Aldi, both German-owned, have recently reported strong festive sales alongside market share gains as cash-strapped consumers shun the big four of British food retailing, which also includes Asda.

Morrisons, which released the figures 11 days early because sales were thought to be so much worse than expected, admitted it will now miss most City profit forecasts.

Tesco said it made £450 million from internet shoppers over the latest period, up 14 per cent on a year earlier.

But Morrisons has only recently entered online and convenience store shopping, and Philips said: “I was disappointed with the sales performance but we are under-represented in key areas.

“We are going as fast as we can, but this year customers were shopping online and through convenience stores.”

One analyst called the company’s performance “quite awful”.

Tesco chief executive Phil Clarke, who is implementing a £1 billion restructuring of the retailer, said consumer finances remained “constrained”.

Analysts said Tesco should meet the City’s profit forecasts of between £3.1bn and £3.4bn for the year to April. Shares in Morrisons closed down 19.7p, at 234.5p. Tesco dropped 4.25p to 324.05p.