Morrisons sales jump as supermarket giant 'helps feed the nation'

Morrisons, the UK’s fourth largest supermarket operator, has posted a jump in retail sales over a “volatile” first quarter, but suffered a hit from plunging fuel demand amid the lockdown.

Morrisons is the fourth largest UK supermarket operator after Tesco, J Sainsbury and Asda. Picture: Eliza Fitzgibbon

Releasing a trading update to investors, the group reported a 5.7 per cent hike in group like-for-like sales, excluding fuel, in the 14 weeks to 10 May. Group sales jumped 10.8 per cent over the last two weeks of the quarter, with a 9.6 per cent contribution from retail and 1.2 per cent growth in wholesale.

But with tumbling sales on its forecourts factored in, group sales were 3.9 per cent down in the quarter.

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The chain, which this week reduced its petrol prices to a maximum of 99.7p per litre at its UK forecourts, said fuel like-for-like sales have slumped about 70 per cent since the UK went into lockdown in late March.

The fuel hit and temporary move to close its in-store cafes, as well as surging costs of protecting staff and adapting its business, are likely to weigh on profits over the first half.

Bosses cautioned that the outlook of the impact of coronavirus remains “uncertain”, though it stopped short of warning over full-year profits.

It added that higher costs from coronavirus are likely to be offset by £228 million in savings from the business rates relief, while it expects fuel sales to bounce back as lockdown measures are eased and people begin returning to work.

Chief executive David Potts said: “We are facing into the unprecedented current challenges and are playing our full part to help feed the nation: working with determination, creativity and pace to serve customers as well as we possibly can.

“The professionalism, enthusiasm and resourcefulness of our frontline key worker colleagues is extraordinary and is showing Morrisons at its very best.”

Quarterly trading saw sales boosted at first by coronavirus panic buying, then impacted by the initial lockdown and weak Easter trading, before seeing a “significant improvement” in recent weeks.

The group has been focusing on meeting soaring demand for home deliveries and has more than doubled its online slots through a significant increase in stores available for order picking, and is launching a new click-and-collect service at nearly 280 stores by mid-June. It also announced the launch of a “British Farmers Food Box” featuring seasonal produce including meats, vegetables, milk and cheeses.

Sophie Lund-Yates, equity analyst at Hargreaves Lansdown, said: “Morrisons echoes the sentiments of other supermarkets – shopping habits are starting to look a little more normal.

“It also confirmed the inconvenient truth that extra sales come with extra costs, and as such a full-year profit boom isn’t in the bag. Volatile trading patterns, plus hiring an extra 25,000 members of staff means earlier stockpiling behaviour isn’t automatically good news.

“The current crisis has provided an unexpected catalyst for the online business though. Morrisons’ offering is smaller than some of its main rivals, but the huge demand for delivery slots has forced the group to up its digital game,” she added.

Meanwhile, B&Q owner Kingfisher reported a 21.8 per cent plunge in UK and Ireland sales at the DIY chain due to the coronavirus lockdown, but said sales have started to recover as stores reopen.

Sales across the wider group - including its Castorama and Brico Depot chains in France - were also badly hit by lockdowns in place across Europe, with total sales down by a quarter in the three months to 30 April. Its breakdown of sales revealed the impact of the lockdown on trading, with UK and Ireland like-for-like sales down as much as 70.3 per cent in one week last month.

Sales have begun to improve since the phased reopening of stores in the UK and France in the second half of April.

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