Embattled supermarket chain Morrisons insisted it is “moving at pace” to turn around trading as it revealed another slide in sales.
The UK’s fourth biggest grocer said like-for-like sales fell 2.6 per cent, excluding fuel, in its third quarter to November 1. Including fuel, same store sales were 5.1 per cent lower following the steep drop in petrol prices.
Bradford-based Morrisons said the slide came as it continued to cut back on promotional vouchers, which hit sales by at least 2.4 per cent over the three months.
The fall in sales is steeper than the 2.4 per cent seen in the previous three months and is worse than analysts’ forecasts of a fall of between 1.8 and 2.5 per cent.
The group’s performance was dragged lower by its move to cut back on vouchers in favour of lower prices in store.
It said this saw overall prices fall by 2.2 per cent compared with a year earlier, not including lower fuel prices at its forecourts.
Chief executive David Potts, who took the helm in March from Dalton Philips, said: “The business is moving at pace on the long journey towards improving the shopping trip for customers.
“Our priorities for the rest of the year are unchanged - to stabilise trading, reduce costs and further improve the capability of the leadership team.”
He added the group was “making good progress in many areas and customers are noticing improvements”.
In September, the grocery chain announced the closure of 11 supermarkets, putting 900 jobs at risk, as it reported a 47 per cent slump in half-year profits.
The day before, it said it had agreed the sale of 140 M local convenience stores for around £25m to concentrate on its larger supermarkets.
Morrisons reiterated guidance that underlying pre-tax profit will be higher in the second half of its 2015-16 year than the £141m made in the first half.
Analyst Darren Shirley at house broker Shore Capital said: “Within the Morrison proposition there are clearly a lot of dynamics at play.
“A new management team is trying to simplify the business for customers, operatives and suppliers alike, so creating a platform for to drive volumes, margins and ultimately shareholder returns.
At the coalface this means taking away largely costly and distracting whistles and bells, eg coupons & vouchers, complex promotions, monthly schemes and elements of the ‘Match & More’ proposition and replacing them with a more straightforward offer revolving around product, price and promotion.
“Such a change in strategy is being implemented at pace, to the short term detriment of sales.
“Reaching the desired proposition is never-ending but within the plans we see generally stronger store disciplines, cleaner stores, improved availability and more impactful promotions year-on-year. ‘Made by Morrisons’ is also filtering its way into the fresh food offer through improved product formulations, eg quiche, whilst Market Street in its entirety remains a proposition that Morrison seeks to bring quality, differentiation and value.”