The UK’s fourth-biggest grocer has seen earnings and market share dented by its lack of exposure to online and convenience store channels which are growing at about 16 per cent and 20 per cent a year respectively.
Its latest results revealed a worse-than-expected 1.6 per cent decline in underlying sales in the six months to the start of August, while pre-tax profits fell 22 per cent to £344 million.
The group warned that customers’ incomes were shrinking under relentless pressure from stubbornly high inflation, as the recovery proves “slow and fragile”.
Phil Dorrell of industry consultancy Retail Remedy described the results as “underwhelming” noting that fast-growing rivals Aldi and Lidl were “snapping away at its heels”.
He said: “Morrisons continues to play multi-channel catch-up. The talk is of building for the future but for many shareholders it still feels like it is stuck in the past.
“If Morrisons is anything, it is resilient and has some good people in the ranks. It will get there eventually but it will be a slow Yorkshire slog.”
Chief executive Dalton Philips said like-for-like sales were steadily improving after falling 1.8 per cent in the three months to 5 May, adding he expects another sales improvement in the second half as its turnaround bears fruit.
Morrisons said it was on track to start selling food online – through a tie-up with internet grocer Ocado – by the end of January. Ocado yesterday reported a 16.4 per cent rise in third-quarter sales.