Morrisons’ festive sales disappoint as it is linked to Best Buy move

SUPERMARKET major Morrisons jolted the market by unveiling much slower Christmas sales than expected yesterday, as the group stonewalled speculation it will swoop for the “big box” stores being vacated by the Best Buy group.

Dalton Philips – chief executive of Morrisons, which has a 15 per cent market share in Scotland – revealed like‑for‑like sales growth of just 0.7 per cent in the six weeks to 1 January.

That was a sharp fall from 2.5 per cent in the third-quarter of its financial year and a consensus City forecast of 1.3 per cent.

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Philips said the group has seen 800,000 extra customers a week in the period compared with last year and a near‑5 per cent rise in transactions, but people were buying less and trading down in the tough climate.

He cited champagne sales falling 7 per cent and cheaper sparkling wine sales leaping 156 per cent, while revealing that Morrisons had a whopping 40 per cent of its products on price promotion. “That’s the highest discounting we have seen all year,” Philips said. “That gives you a sense of how aggressive it was out there. I think the whole sector will be in the high 30s or low 40s [percentage discounting] for the Christmas period.”

He added: “Our customer base is the ‘most average’ of UK customers if you look at the demographics. It’s very tough out there, people have been watching the pennies.”

The Morrisons boss, who is investigating giving the group an online food offering and has opened a handful of convenience format stores, forecast no early let‑up in tough trading.

In recent years, traditional like‑for-like sales growth among the big supermarkets has been around 3 per cent, but Dalton said he believed this would be nearer 1 to 2 per cent for some time.

“With consumer confidence at a generational low, I think you are going to see a [supermarket] sector in general that has very low like for like sales growth,” he said.

Richard Pennycook, Morrisons’ finance director, declined to comment on strong speculation that the group wants to imminently acquire the 11 big edge-of-town stores being vacated by Best Buy, the struggling electricals retailing joint venture run by Carphone Warehouse and the eponymous American company, and convert them into its Kiddicare children’s clothing brand.

But Pennycook added that Morrisons felt Kiddicare had great growth opportunities, both in terms of stores and its existing overwhelmingly online offering.