Morrisons' growth leaves rival grocers trailing in its wake

  • @Thompj

The grocer Morrisons has streaked ahead of its big three grocery rivals by posting robust third-quarter sales growth, but it warned that a third of its shoppers have "nothing left" at the end of the month.

The supermarket's sales were strongest in London and the surrounding South-east, but its focus on fresh food and low prices and its new ready-meal ranges helped it serve an extra 450,000 shoppers a week across the UK.

Morrisons posted underlying sales up by 2.4 per cent, excluding fuel and VAT, in the 13 weeks to 30 October, trouncing City expectations.

The figures suggest the UK's fourth biggest grocer is growing faster than Asda, Sainsbury's and Tesco – a view supported by this week's closely watched Kantar Worldpanel data for the 12 weeks to 30 October.

Dalton Philips, the chief executive of Morrisons, said: "The like-for-like sales growth is the strongest out there and has been the strongest all year. Right through 2011 we have seen volume growth in a market that has seen volumes decline."

Total sales at Morrisons rose by 4.6 per cent over the quarter and by 7.6 per cent when petrol is included.

But Mr Philips said that a third of the grocer's customers have "nothing left at the end of the month" and it is timing its promotions to coincide with a spike in activity around pay-day at the end of the month. For instance, Morrisons is now providing more promotions on bulk buys towards the end of the month, as more shoppers share their purchases with friends and freeze food.

Mr Philips said: "Consumer sentiment is at the lowest in a generation and people are being frugal and they are having to de-risk their shop." The combination of more consumers eating at home – as opposed to at restaurants – and the recent launch of its new own-label M Kitchen ranges has helped Morrisons increase its ready-meal sales by 60 per cent. Morrisons is expanding rapidly and said it was on track to add 600,000 square feet of new space this financial year.

The grocer declined to comment on its interest in Iceland Foods, which is up for sale for up to £1.5bn.