Morrisons tops forecasts after holiday spending

First-quarter sales at Morrisons smashed City forecasts after it was boosted by the Royal Wedding and warm April weather. But the UK's fourth-biggest grocer warned it expects a "tough" year ahead as consumer confidence and spending remains depressed.

The Bradford-based supermarket chain delivered underlying sales, excluding fuel and VAT, up by 2.5 per cent, for the 13 weeks to 1 May – ahead of City expectations of a 1 per cent rise. It was boosted by record customer numbers of more than 11 million a week.

Dalton Philips, the chief executive of Morrisons, said it had "traded ahead of the market right through the quarter". But he acknowledged it had benefited from the "two busiest days of the year" so far on the Thursdays before Easter and the royal wedding, which were nearly as busy as its peak Christmas trading period.

He said: "People just wanted to get out to picnic and party."

Morrisons said demand for its fresh party food, such as sandwiches and other picnic items, surged by 300 per cent in the week of the royal wedding. Mr Philips added that the chain sold 150 miles of bunting. "Downing Street even used our bunting," he said.

Morrisons grew total sales, excluding fuel, by 4.2 per cent over the quarter. The rise in its underlying sales compared to 0.3 per cent growth in its fourth quarter and is ahead of the most recent figures from Tesco, Sainsbury's and Asda.

But Mr Philips expects consumers to "tighten it right back up again" after the temporary spending spree in April.

He added: "I don't see any respite for the rest of the year. It is going to be tough."