Morrisons reported its second consecutive quarter of sales growth, signaling that changes made by chief executive Officer Dave Potts have stabilized the business after a four-year slump.
Same-store sales rose 0.7 per cent in the 13 weeks ended May 1, the UK’s fourth-largest grocery chain said in a statement Thursday. That compares with the median estimate of 16 analysts for a 0.2 per cent increase. The figures exclude fuel.
Since starting the job just over a year ago, Potts has cut prices, put more staff on the shop floor and sold Morrisons unprofitable convenience stores. While sales are no longer falling, Morrisons is still battling against the food price deflation that has squeezed profit margins across the industry for the last two years. Potts said he expects prices to continue falling, echoing comments on Wednesday by J Sainsbury CEO Mike Coupe.
“Customers are responding and satisfaction levels remain ahead of last year,“ Potts said in the statement. “We will continue to invest in improving the shopping trip for customers.”
Morrisons shares have been among the best performers in Britain’s FTSE 100 Index this year, rallying 27 per cent to 187.5 pence as of Wednesday’s close.
© 2016 Bloomberg L.P
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