Shares rise on turnaround hopes at Morrisons

Dalton Philips, chief exec of Morrisons
Dalton Philips, chief exec of Morrisons
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SHARES in Morrisons lifted by as much as three per cent in trading today after latest industry figures suggested that the beleaguered retailer’s turnaround plan might be starting to work.

Research from Kantar Worldpanel showed that Morrisons’ share of the grocery market fell by 1.9 per cent to 11 per cent in the 12 weeks to August 17.

Figures for the last four weeks of that period however showed a 2.4 per cent improvement in Morrisons’ share of the total till roll.

The news prompted investors to buy into the stock which has lost a third of its value this year.

Clive Black, analyst at Shore Capital and a persistent critic, told The Yorkshire Post that “Morrisons could materially be turning a corner”.

He added: “While it’s still losing market share the sense is that Morrisons’ rate of decline has improved.

“If that’s the case, the price cuts Morrisons put through in March might be starting to filter into the consumer psyche.

“One swallow does not a summer make but it could be a significant turning point for Morrisons.

“Pat on the back for Morrisons.”

A spokesman for Morrisons said he could not comment on the data due to stock exchange regulations ahead of next month’s interim results.

The same data underlined the strong performance of Leeds-based rival Asda, which boosted market share by 1.2 per cent, and the continuing woes of Tesco, which saw a 4 per cent fall.

Mr Black told The Yorkshire Post: “Asda has been the best performing of the Big Four supermarkets for the last year now.

“Asda identified the suspicion of the consumer of how the Big Four were playing the recession some time ago, simplified its offer, cut its prices and has reaped the benefits.

“Asda has probably seen the least outflow to Aldi and Lidl and is growing faster than the other three.”

Asda, led by chief executive Andy Clarke, announced like-for-like sales growth of 0.5 per cent for the 10 weeks to June 30 earlier this month.

A spokeswoman said: “Our strategy has put us on a clear path that will deliver long term sustainable growth for Asda, and we are focussed on the long game in what remains a tough market.

“What’s pleasing about this Kantar data is that it shows our strategy is delivering for customers – offering clear, low prices week in, week out that provide real value.”

Sainsbury’s share grew by 0.3 per cent during the 12 weeks to August 17, but fell by 2.2 per cent in the last four weeks of the period.

Tesco and Sainsbury’s both declined to comment.

Kantar said Waitrose and Farm Foods joined Asda in outperforming a tough market.

Edward Garner, director at the consumer insight firm, said: “Asda and Waitrose have achieved growth with differing strategies.

“Asda has pushed its ‘Price Lock’ strategy to keep prices on everyday essential items low, while Waitrose is running competitive offers on home delivery alongside offers for myWaitrose card users allied to its overall quality and provenance positioning.”

Aldi and Lidl, the German-owned discounters which invaded Morrisons’ northern heartlands, maintained their record shares of 4.8 per cent and 3.6 per cent respectively.

Kantar estimates that 53 per cent of UK households have shopped at either outlet over the past 12 weeks.

The price war between supermarkets and deflation in the price of staple items has driven down inflation yet again.

Kantar said the overall growth of the market fell to a record low of 0.8 per cent during the period to stand at £32bn.

Kantar, which is owned by WPP, monitored the household grocery purchasing habits of 30,000 demographically representative households. It is regarded as the most authoritative survey of shopping behaviour.

Shares in Morrisons closed at 184.7p, up 1.65 per cent.

Good news after torrid year

Market share figures from Kantar Worldpanel represented the first bit of good news for quite some time in what has been a torrid year for Morrisons.

The Bradford-based supermarket giant has been hit hard by the rise of German discounters and lags rivals in the fast-growing online and convenience store segments.

Chief executive Dalton Philips, in post since March 2010, has faced harsh criticism from Sir Ken Morrison, who used June’s AGM to launch a scathing attack on his turnaround strategy.

But senior managers are confident that the business is starting to show signs of improvement. It is due to report on trading on September 11.