Shoppers desert Morrisons as Christmas sales slump

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The Independent Online

Morrisons had a Christmas to forget after the supermarket chain posted its worst sales for eight years and admitted it was losing market share to the discounters Aldi and Lidl.

The Bradford-based grocer posted a 2.5 per cent slump in like-for-like sales over the six weeks to 30 December, which all but confirmed its status as the worst festive performer among the big four supermarkets. Morrisons described its performance as "disappointing" and is expected to contrast with a small rise in underlying revenues at its listed rivals, Tesco and Sainsbury's, this week as well as a fightback from Walmart-owned Asda.

This was the weakest trading from the UK's fourth-biggest supermarket since 2005, when it was recovering from its troubled acquisition of Safeway in 2004. Morrisons has been struggling from having only a handful of smaller convenience stores and no online grocery offer, which are the two fastest-growing areas of the market.

The grocer admitted it needed to improve its marketing, such as better promoting its large numbers of butchers, bakers and fishmongers in stores, and that it was losing market to Aldi and Lidl. Dalton Philips, the chief executive of Morrisons, said: "We have been losing market share to the discounters – all the quoted retailers [Tesco and Sainsbury's] have been. They [Aldi and Lidl] are a strong growing force in the market." Aldi and Lidl grew sales by 27.3 per cent and 11 per cent over the 12 weeks to 25 November, according to Kantar Worldpanel.

Shares in Morrisons held firm yesterday, losing only 0.8p to 256.1p largely because the City was relieved that its sales were not as bad as had been feared and there was no profit warning.

Analysts expect Morrisons to post a 2 per cent fall in pre-tax profits to £913m for the year to February. The grocer's bottom line has also been dented by a higher interest bill from its two-year programme to buy back £1bn of shares.

Total sales fell 0.9 per cent over the six weeks, and it expects trading conditions in the grocery sector to remain "difficult" this year.

Morrisons last week hired the TV duo Ant and Dec that will see the supermarket sponsor ITV's Britain's Got Talent and Ant & Dec's Saturday Night Takeaway this year.