Morrisons' chief executive, Dalton Philips, yesterday said investors will "hold our feet in the fire" over his strategy but that he has the City's backing despite plunging sales.
Mr Philips said a tour of 100 financial institutions as part of the grocer's investor roadshow, which concluded last week, had "shown we have broad support for our strategy". However, he acknowledged the pressure is on.
Morrisons yesterday unveiled a 7.1 per cent slump in first-quarter like-for-like sales as Aldi and Lidl snatched its shoppers. The supermarket chain slashed the price of 1,200 lines by 17 per cent last week to counter the rise of the discounters and to reignite its two-year attempt to report like-for-like sales growth. "I'm very confident we are doing the right things," Mr Philips said. "My job is to make big, bold decisions. The proof will be when there are more items in more baskets; how could it not be the right strategy to tackle this on price?"
Sainsbury's outgoing chief executive, Justin King, accused Morrisons of "playing catch-up" in lowering prices and said customers were enticed by ethically sourced products rather than simply price. Mr Philips retorted: "We are very competitive on our pricing. I'm happy with our position among the big four [supermarkets] on price, but versus the discounters we can be cheaper."
Pressure on Mr Philips has intensified as criticism from analysts and former directors adds to a catalogue of problems including a huge payroll data leak and a backlash against the projection of an ad on the Angel of the North.
Bruno Monteyne, an analyst at Bernstein Research, said: "While we agree that the management team is making the right strategic changes, we think the plan is still too vague and we see lots of uncertainty about the team's ability to execute the plan."
Morrisons said in March that it would spend £1bn over the next three years in bringing its prices down. It is also reducing the number of lines it carries in an attempt to lower operating costs. Mr Philips said the disposal of its Kiddicare business was progressing well, with interest from trade and private equity buyers.
Its long-awaited online grocery service will reach London next Monday, delivering to over 400,000 households in the north-west of the capital. The digital offer was launched in January after Morrisons inked a £200m deal with Ocado, and Mr Philips said the service has been "performing ahead of expectation".
The company's shares closed up 8.1p at 198.9p.