More customers ‘satisfied’ with shopping at Morrisons

Morrisons insisted it was "moving at pace" to turn around trading as it revealed another hefty slide in sales.

The news came as the Bradford-based chain announced a 2.6 per cent fall in like-for-like sales in the three months to November 1, which was worse than Tesco and Sainsbury’s, but ahead of Asda.

New chief executive David Potts said 60 per cent of customers said they were “very satisfied” with their shop at Morrisons, up from 51 per cent a year ago.

“It’s quite a challenge for customers to say, yes, they were very satisfied. We’ve made progress. Our stores are easier to get around, they’re cleaner and staff have got a smile on their face,” said Mr Potts.

Morrisons said it is “moving at pace” to turn around trading.

It said the slide in trading was largely caused by the decision to cut back on promotional vouchers, which knocked sales back by at least 2.4 per cent over the three months.

The 2.6 per cent 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 business is moving at pace on the long journey towards improving the shopping trip for customers,” said Mr Potts.

“We are doing this with far less reliance on coupons and vouchers. Lower prices create deflation.”

He said that the decision to cut prices means the group is far more competitive.

“We’ve never been closer to Asda and we are closer to Aldi. There is more for us to do,” he added.

The company, which trails market leader Tesco, Leeds-based Asda and Sainsbury’s in annual sales, has not reported positive underlying sales since the fourth quarter of its 2011-12 year.

Mr Potts joined as chief executive in March, but he warned in September it would be a “long journey”.

Bernstein analyst Bruno Monteyne said: “Falling like for likes and total sales worse than consensus will disappoint the market and is in line with our view that an undifferentiated retail offer will underperform the UK market.

“Morrisons has not yet found a trading and retail proposition that will differentiate it in the market place. However, it has a strong balance sheet which gives it more time than others to find a new identity.”

Analyst Clive Black at Shore Capital said: “A new management team is trying to simplify the business for customers, operatives and suppliers alike, so creating a platform to drive volumes, margins and ultimately shareholder returns.

“At the coalface this means taking away largely costly and distracting whistles and bells, eg coupons and 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.”

Morrisons’ finance director Trevor Strain said underlying sales volumes, though still slightly negative, are improving quarter-by-quarter.

Yet some retail commentators remain to be convinced.

“To claim you are making good progress on the back of these numbers is bordering on the delusional,” said John Ibbotson of retail consultants, Retail Vision.

Morrisons reiterated guidance that underlying profit will be higher in the second half of its 2015-16 year than the £141m made in the first half.