The '˜British underdog' bounces back with surprise rise in sales

CEO David Potts, the man behind the Bradford-based supermarket’s recovery, said: “We are on a long journey to lead the revival of this great company.

“We are the small guy in the squeezed middle. We are the British underdog.”

In his first Christmas in charge, Mr Potts said like-for-like sales rose 0.5 per cent in the six weeks to January 3, a far better performance than last year’s 3.1 per cent decline.

The performance was much better than analysts’ expectations and showed an improvement over Christmas, with like-for-like sales up 0.2 per cent in the nine weeks to January 3, implying a strong festive boost.

The figures will provide a major boost for the company as in previous years it has seen discount rivals Aldi and Lidl eat into its festive sales.

The group said it is gradually winning back customers with a 1.3 per cent increase in transactions at its supermarkets.

It also reported a sharp rise in customer satisfaction levels.

Customer satisfaction is up by between six and 10 per cent on last year with 55 per cent of customers saying they are “very satisfied” with their shopping experience.

“The key word here is ‘very’,” said Mr Potts.

“Customers are very satisfied with Morrisons. Last year satisfaction rates were in the mid 40s.”

Morrisons has not reported positive like-for-like sales since 2012 and last month it was ejected from Britain’s FTSE 100 blue chip index.

Analyst Bruno Monteyne at Bernstein said: “This is a great result for Morrisons, having significantly improved trading over the important Christmas period. It is well above even the top end of the range of consensus estimates.”

Analysts at Jefferies said: “The group appears in great shape to deliver from here. There are reasons to look at 2016 with greater confidence.”

Mr Potts said Morrisons will continue to lower prices over the coming year.

“One of our promises is to become more competitive. Customers want to trust a food retailer’s pricing. We want to have sharper prices,” he said.

Mr Potts said the focus is on everyday value and the group has cut back on discount vouchers, which knocked around one per cent off like-for-like sales growth.

Morrisons, which has nearly 500 stores, has lost market share heavily in recent years and Mr Potts has been leading an overhaul since taking the helm. He stressed that trading could remain volatile, saying that the “turnaround will not be in a straight line”.

“We have a long journey ahead, but when we offer outstanding value we win customers back,” he said.

Morrisons is forecasting an annual underlying pre-tax profit of £295m to £310m, before £60m of restructuring and store closure costs.

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