Morrisons feeling the pressure

Supermarket Morrisons and pub chain Wetherspoon will reveal how they are coping with the consumer spending squeeze this week.

A surge in profits at Morrisons on Thursday is set to be overshadowed by a recent weaker sales performance. The chain has seen strong growth in past years, but more recently there have been signs it is beginning to feel the heat in a supermarket price war.

Strong like-for-like sales growth in the first three quarters of its financial year faded to 0.7 per cent in its most recent update for the six weeks to 1 January, while Morrisons’ market share dipped slightly in the 12 weeks to 19 February.

The group is expected to report a 6 per cent rise in underlying profits to £922 million for the year to the end of January, on sales up 7 per cent to £17.6 billion.

Pub chain JD Wetherspoon has been feeling the pressure in recent months as resurgent rivals breathe down its neck and industry declines are worsened by relentless tax rises.

The group’s outspoken chairman, Tim Martin, recently warned that the group, which has been opening 50 pubs a year, may have to scale back expansion plans if the UK government does not give the industry a break by scrapping planned rises in alcohol duty.

Douglas Jack, an analyst at Numis, expects Wetherspoons to report a 4 per cent rise in profits to £33.4m in the six months to the end of January, but fears that the chain’s margins will be further squeezed in the coming months.