Morrisons to win 'big four' festive battle

MORRISONS is expected to emerge as the winner of the Christmas war between the UK's "big four" supermarkets when it posts sales figures on Thursday.

Analysts at Evolution Securities expect Morrisons – which has lost its highly regarded chief executive Marc Bolland to Marks & Spencer – to post like-for-like sales growth of up to 7 per cent for the festive period.

This would help Morrisons surpass a resurgent Tesco's 4.9 per cent same-store growth unveiled last week and the 4.2 per cent posted by Sainsbury's, although Asda has yet to report numbers.

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Evolution's Dave McCarthy said the anticipated strong trading from the UK's fourth-biggest supermarket would be "remarkable" on the back of strong festive trading in the two previous years as the company reaps the benefits of Bolland's turnaround of the business.

But he pushed for a "rapid conclusion" to the hunt for a successor, adding: "The big issue is who will be the new chief executive?

"Until this is resolved, the shares will be held back by uncertainty. This may not matter long term, but it is essential that sales momentum is retained."

Greg Lawless, analyst at Collins Stewart – which initiated coverage of Morrisons last week with a "hold" recommendation – agreed that ending the uncertainty over Bolland's replacement was key to supermarket's continued growth.

"Bolland was the visionary and creative leader in the business," said Lawless. "His departure after only three years is a significant blow to the business.

"We have question marks over the longer term growth for the company as we are almost at the end of Bolland's three year recovery plan and we are beginning to ask: what next?"

Collins Stewart noted that Morrisons' operating margins were heading back towards 5.2 per cent with room for more growth.

While the figure is ahead of rival Sainsbury's 3.3 per cent, the margin still lags behind market leader Tesco, which commands 6.2 per cent.

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Analyst Justin Scarborough at house broker RBS Equities said: "The market reacted badly to the departure of Bolland and the stock fell by about 10 per cent but has since then regained most of the fall. We expect no imminent announcement about a new chief executive but believe the business is in good shape strategically, operationally and financially, and that its growth outlook remains strong."

Bradford-based Morrisons – whose Christmas adverts featured celebrities including Richard Hammond and Denise Van Outen – began life as a market stall in 1899. It now has more than 400 stores and 120,000 staff.