Morrisons speeds up growth in tough times

Group chief executive Dalton Philips said he was confident about the future as he predicted tough economic times would mean people eating and drinking more at home rather than going out.

“People will be trading more out of restaurants and pubs into the supermarkets, so that bodes well for the sector,” Philips said.

Morrisons, which has more than 50 stores and a 15 per cent market share in Scotland, said sales at stores open over a year lifted 2.4 per cent in the 13 weeks to 30 October, up from the 2.2 per cent in its first trading half.

Earlier this week Sainsbury reported same‑floorspace sales growth in its latest trading period of 1.9 per cent, while Marks & Spencer said its food sales were up 2.1 per cent.

The Bradford‑based group said an indicator of an increasing trend for eating at home rather than at restaurants and pubs was a 60 per cent surge in sales of prepared meals and pizzas in the latest period, mainly under the M Kitchen brand.

Philips said “empirical” research conducted by Morrisons, including customer exit surveys, showed a third of its customers had no disposable income left over at the end of the month.

This was when the company was noticing spikes in sales, as people were more often paid towards the end of the month, he said. Underlining the austerity climate and debt worries, Philips said people were increasingly avoiding credit card purchases.

“People are spending in cash and buying in bulk,” he said. Another noticeable trend was younger customers with children buying fresh produce “to cook from scratch”, Philips added.

The chief executive said Morrisons was holding its own in the price wars with rivals Tesco, Asda and Sainsbury’s, calling it “the cut and thrust of retailing”.

Dave McCarthy, food retailing analyst at Evolution Securities, said: “Morrisons is riding the virtuous circle and has good momentum.”