Morrisons' Christmas sales disappoint

 

Supermarket chain Morrisons admitted today that its Christmas sales were below par after feeling the heat from rivals in a “highly promotional” market.

The UK's fourth-biggest grocer, which employs around 130,000 staff at 455 stores in the UK, reported a 2.5% decline in like-for-like sales for the six weeks to December 30, a performance it labelled as disappointing.

Despite the latest drop in sales, which follows a 2.1% decline in the previous quarter, Morrisons said it remained on track to meet profit expectations.

Analysts believe Morrisons has struggled to compete because of its lack of grocery delivery service and small number of convenience stores.

Competition in the sector over the Christmas period has been as fierce as ever, with the big players focused on promotional deals and money-off coupons.

Tesco sharpened its performance after a disastrous 2011 and is likely to show a modest return to like-for-like sales growth later this week, while Sainsbury's will also be up by about 1% in sales figures on Wednesday. Morrisons has also been squeezed by further strong growth from discounters Aldi and Lidl.

Morrisons said: "The environment over the Christmas period has continued to be challenging with hard-pressed consumers increasingly shopping to a budget and vouchering a prominent feature of a highly promotional market."

However, the Bradford-based company admitted it has not done enough to advertise its promotions and communicate its points of difference.

Chief executive Dalton Philips recently announced an advertising deal with TV presenters Ant and Dec and sponsorship of hit shows Britain's Got Talent and Ant & Dec's Saturday Night Takeaway in a bid to promote the chain's fresh food credentials.

A move into online shopping is expected later this year, while the company hopes to have 70 convenience stores by the end of 2013.

Mr Philips praised staff for achieving good availability of produce and high standards of service during the festive peak period.

However, he added: "In a difficult market our sales performance was lower than anticipated, but we have a strong business and significant opportunities to advance our strategy."

Analysts noted that profit forecasts for Morrisons were already coming down in the City before the disappointing update.

Seymour Pierce stockbrokers responded by knocking another £10 million from its forecast for the year to the end of January, taking the figure to £880 million, and has cut the 2014 figure by 8% to £850 million.

Its retail analyst Freddie George said the sales fall came despite softer comparatives with a year earlier.

He added: "Its fresh focus has perhaps taken the offer too far away from its traditional value roots and we are not convinced there is a fresh/craft differentiated niche to be carved out.

"With catch-up investment needed in convenience and online, we expect Morrisons to continue to underperform the industry in the year ahead."

PA

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA celebration of British elections
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Trainee Consultant - Surrey/ South West London

£22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...

Ashdown Group: Trainee Consultant - Surrey / South West London

£22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...

Recruitment Genius: Claims Administrator

£16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...

Recruitment Genius: Senior SEO Executive

£24000 - £28000 per annum: Recruitment Genius: A Senior SEO Executive is requi...

Day In a Page

Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power
Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

The price to be paid for challenging the rule of extremists

A revolution now 'consuming its own children'
Welcome to the world of Megagames

Welcome to the world of Megagames

300 players take part in Watch the Skies! board game in London
'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

Charlotte Gainsbourg on 'Nymphomaniac'

Starring in one of the most explicit films ever
Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

Robert Fisk in Abu Dhabi

The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

Vince Cable exclusive interview

Charging fees for employment tribunals was 'a very bad move'
Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

Iwan Rheon is returning to his Welsh roots

Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

It's time for my close-up

Meet the man who films great whites for a living
Increasing numbers of homeless people in America keep their mobile phones on the streets

Homeless people keep mobile phones

A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before