Morrisons sees festive sales slide amid shopper uncertainty

Supermarket Morrisons has posted falling sales over the crucial festive season amid “unusually challenging” trading and shopper uncertainty.

The UK’s fourth biggest grocery chain reported a 1.7% fall in group like-for-like sales, excluding fuel, for the 22 weeks to January 5 covering its third quarter and the key Christmas period.

It said it moved to slash prices to help boost trade, but admitted it missed out after choosing not to take part in November’s Black Friday offers.

The group said: “Throughout the period, trading conditions remained challenging and the customer uncertainty of the last year was sustained.”

Chief executive David Potts said there was little sign of a so-called Boris Bounce after the Conservative Party’s solid victory at last month’s election and warned consumer uncertainty would remain until a Brexit deal is agreed.

The group added that the fuel market was also “highly competitive”, with group like-for-like sales including fuel down by 2.8%.

While Morrisons did not provide specific trading figures for the Christmas period, experts at Barclays estimated a 2.4% drop in retail same-store sales for the most recent nine weeks.

This compares with a 0.6% rise in retail sales – excluding wholesale – over the same nine-week period a year earlier.

Separate market share data from Kantar Worldpanel signalled a 2.9% fall in the chain’s sales for the 12 weeks to December 29.

The Kantar data also revealed Morrisons lost market share, down to 10.3% from 10.6% a year ago.

But Morrisons said full-year profits remained on track with forecasts despite the Christmas sales disappointment.

Shares also rose 3% as the sales decline was not as bad as feared.

Mr Potts said: “It was encouraging that during an unusually challenging period for sales, our execution was strong and our profitability robust, demonstrating the broad-based progress we have made during the turnaround.”

He added: “As always, we will take some learnings into the new year and look forward to 2020 with a strong plan and solid foundations on which to continue to grow.”

The chain’s boss cautioned there will be “uncertainty in the market until Brexit becomes clearer”.

Morrisons said in the overall 22-week period, third quarter same-store sales to November 3 fell 1.1%.

This followed a 2.4% drop in the previous three months.

The group saw flat comparable sales growth for its wholesale division over the 22 weeks, which includes tie-ups with McColl’s and Amazon.

Morrisons said wholesale trading was hit by lower total sales at McColl’s, but added that the performance was better at the 10 stores converted to Morrisons Daily.

It plans to roll this trial out to around another 20 stores over the next two months.

The figures kick off the festive trading updates from the major UK players and follow sales data from German discounter Aldi on Monday, which revealed a 7.9% rise in total sales for the four weeks to December 24.

Aldi did not provide like-for-like figures.

Arlene Ewing, investment manager at Brewin Dolphin, said: “The UK grocery market has undoubtedly been tough, with intense competition from the discounters, weak consumer confidence, and high levels of promotional activity.

“In that environment, these are a resilient set of numbers from Morrisons.”