Morrisons’ sales slide but it refuses to ‘chase market share’

MORRISONS refused to pursue market share “at any cost” yesterday as it announced its first drop in like-for-like sales for eight years.

Britain’s fourth-largest supermarket chain, which is facing tough competition in the form of price promotions from rivals such as Asda and Tesco, said like-for-like sales, excluding fuel and VAT, fell 1 per cent in the 13 weeks to 29 April.

The fall partly reflected a tough comparison with strong trading in the same period last year, when like-for-like sales rose 2.5 per cent as spending was boosted by an exceptionally warm Easter and celebrations surrounding the royal wedding.

Morrisons has not recorded a drop in like-for-like sales since its difficult acquisition of Safeway in 2004, which led to a series of profit warnings.

Sales at the group have been hit amid intense promotional activity in the supermarket sector. Tesco, Britain’s biggest retailer, has stepped up promotions and vouchers as it seeks to fight back from a shock profit warning in January, while rivals Asda and Sainsbury’s have largely followed suit.

Morrisons’ chief executive Dalton Philips said: “We are prepared to sit back from this activity rather than pursue small market share gains at any cost.” In March, the retailer reported an 8.4 per cent rise in full-year pre-tax profits to £947 million, on the back of like-for-like sales growth of 1.8 per cent. However, that rate slowed to just 0.7 per cent in the fourth quarter, which covers the critical festive period.

Shore Capital analyst Clive Black said he was concerned that Morrisons was “losing share to Asda and not making hay whilst Tesco UK has been underperforming”.

He said Morrisons also seemed not to be challenging the higher category grocers – Marks & Spencer, Sainsbury’s and Waitrose.