Morrisons hails Christmas sales performance

The UK's fourth biggest chain said like-for-like sales excluding fuel and VAT grew 1 per cent in the six weeks to January 2 - up on City forecasts of between 0.5 per cent and 0.8 per cent. While sales slowed from 1.3 per cent same-store growth in the quarter to October 31, the group left its full-year profit expectations unchanged.

Dalton Philips, chief executive of the Bradford-based chain, said the company had risen to the "twin challenges" of a difficult consumer environment and a prolonged spell of adverse weather and added: "This has been another good performance in a tough market."

The update, ahead of the end of Morrisons' financial year on January 31, comes at the start of an important week for retailers, which includes further updates from Tesco, Sainsburys and Marks & Spencer.

Morrisons warned in September that it expected a low level of market growth in the remainder of 2010, with a slight rise in prices due to the re-emergence of some commodity price pressures.

Last week, data released by market researcher Nielsen Company showed the chain's market share dropped to 10.8 per cent in the 12 weeks to December 26, compared with 11 per cent a year earlier.

But the company has remained defiant, and plans to trial new convenience stores and an online operation this year, as well as creating 5,700 jobs by opening new stores and 300 in manufacturing.

Morrisons said it served an average of two million more customers each week over the Christmas period than five years ago, and in that time has grown total sales excluding fuel by 47 per cent.

Mr Philips said smoked salmon and Morrisons' own brand Pannetone, a type of sweet bread loaf, were particularly popular over the festive season.

He said it was "almost impossible" to quantify the impact of the wintry weather - but the group did not shut any stores due to the heavy snow and freezing temperatures.

Mr Philips said prices had picked up due to inflation but were still at a "relatively low level".

Looking ahead, he said: "There's going to be a lot of spending cuts and consumer confidence is very fragile. It's going to be a tough year ahead."

Morrisons expects full-year pre-tax profits to the year ending January 31 to be 860 million and has not altered this position.

Kate Calvert, retail analyst at broker Seymour Pierce, said that, after a strong period, Morrisons was now experiencing a more "normal" rate of growth.

She added: "We suspect Morrisons' performance will turn out to be the weakest of the majors, with Sainsbury due to report on Wednesday and Tesco on Thursday."

Analysts at Royal Bank of Scotland said: "Given the tough prior year comparisons (last Christmas Morrisons delivered 6.5 per cent like-for-like sales growth) as well as the impact of the bad weather, we believe that this performance is a fairly good one and while background food price inflation may have crept up, promotional intensity in the period, was also likely to have increased year-on-year, which if correct, would suggest that volumes were broadly flat in the period."