Strong Christmas trading boosts Morrisons sales

Morrisons supermarket in Mart Street, Hawick.Morrisons supermarket in Mart Street, Hawick.
Morrisons supermarket in Mart Street, Hawick.
Supermarket group Morrisons saw its shares near the top of the FTSE 100 leaders' board after posting a robust festive trading performance across its retail, wholesale and online arms.

However, latest industry data yesterday suggested bigger rival Tesco, which reports tomorrow, did better over the period, with an estimated 3.1 per cent surge in like-for-like sales over the 12 weeks to end-December.

By contrast, Morrisons, Scotland’s third biggest supermarket chain, said its like‑for‑like sales jumped 2.8 per cent in the ten weeks to 7 January.

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Retail consultancy Kantar Worldpanel said despite the rising sales Morrisons’ market share slipped to 10.7 per cent in the Christmas quarter from 10.9 per cent a year earlier.

However, the food retailer’s shares jumped 2.4 per cent to close at 232.3p after it said its retail sales rose 2.1 per cent, its wholesale revenues were up 0.7 per cent, with growth exceeding 10 per cent.

Sales were especially strong over the Christmas and New Year period, with same-floorspace sales up 3.7 per cent in the six weeks to 7 January.

David Potts, group chief executive, said: “More and more customers found more things they wanted to buy at competitive prices at Morrisons this Christmas.”

He added that, after three years in a row of sales growth, the group now planned to open a “handful” of new supermarkets a year, with one or two set for 2018.

Morrisons also confirmed its wholesale deal with the McColl’s convenience store chain – which includes the Glasgow-based RS McColl – would begin rolling out this week as part of plans to build a broader, stronger business.

The deal – announced in August – will also see Morrisons relaunch Safeway branded products for the first time since taking over the rival retailer in 2004.

The partnership will see the group supply Safeway and branded products to 1,300 convenience shops and 350 newsagents.

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Retail analyst Clive Black at Shore Capital said the trading update proved Morrisons was in “good shape”. Potts joined Morrisons in 2015 to lead a recovery after it was hurt by the rise of the discounters in its northern English heartlands and the strategic failure of previous management under Dalton Philips.

The latter was seen as including a late entry into online retailing compared with its major competitors, whereas is now seen as a growing success.

Mike van Dulken, head of research at Accendo Markets, said the “only blot on the update” was Potts leaving full-year profit guidance unchanged.

Dulken questioned whether this was due to management conservatism and a desire to engineer a “beat” to expected profits when they are announced in early 2018, or “prudence in the face of still tough conditions for the UK consumer”.