Morrisons looks forward to a 'wonky' and 'The Best' Christmas

Morrisons expects customers to splash out on luxury items this Christmas, whilst keeping the budget down by saving money on wonky fruit and vegetables.

Morrisons' chief executive David Potts

The group's chief executive David Potts said: "We are looking for a wonky Christmas and a 'Best' Christmas."Customers always look for value for money. This year we are seeking to hold the price of the most popular 100 items for Christmas. "Many of our customers are on a budget, but even in the hardest of years, customers want to spend a bit more on putting things on the table that taste good and look good."Mr Potts predicts that customers will splash out on luxury items such as Morrisons' 'The Best' lobster, prawn and prosecco knickerbocker glory starter, whilst saving cash on wonky sprouts and parsnips.Sales of its top end 'The Best' range are up 12 per cent and the group has launched another 250 Christmas items."'The Best' is an important part of our repertoire - customers love it," said Mr Potts.He was speaking as the Bradford-based firm announced its twelfth consecutive quarter of sales growth despite a slight dip in the third quarter against tough comparisons with the summer quarter when hot weather and England's progress in the World Cup boosted sales. The firm reported a 5.6 per cent rise in like-for-like sales in the 13 weeks to November 4, slightly behind forecasts. This was slightly lower than the 6.3 per cent growth recorded in the previous quarter as the football and hot weather encouraged shoppers to stock up on food and drink.Mr Potts said: "The second quarter was remarkable because of the heatwave, the Royal Wedding and England's fortunes in the World Cup. If I look ahead to the fourth quarter, we have some good plans."These include a wider vegan range and new children's food brand.Mr Potts said: "We sold 5,000 nut roasts last year. We've ordered 20,000 this year."Analyst Clive Black at Shore Capital said: "We sense that the British in the main are a bit fatigued by the Brexit malarkey and it is seemingly weighing upon consumer sentiment for the first time since the UK-EU Referendum, much to the chagrin of the Brexiteers and the delight of the Remainers."Clearly, therefore, deal or no deal is likely to have an impact upon the prevailing mood too. That said, we believe that Santa is ready, and the British will continue to embrace Christmas, making it another year where it is all to play for. In this respect Morrison is pleased to be awarded a variety of product awards for seasonal lines whilst it has 250 exclusive 'The Best' lines set for Christmas 2018."Mr Potts said Morrisons has not seen a change in consumer behaviour or a switch to own brand and entry point priced goods."We sold out of Halloween kids outfits and pumpkin sales were up 23 per cent," he added.Morrisons said the number of transactions was almost flat in the group's third quarter, whereas summer trading saw 2.6 per cent growth. The group's retail division made a smaller contribution to overall like-for-like growth.Sales growth remained strong thanks to the supermarket's rapidly growing wholesale arm.The division contributed 4.3 per cent to overall like-for-like growth in the third quarter, compared with 3.8 per cent in the second quarter and just 0.4 per cent this time last year.Morrisons plans to expand the business even further with a forthcoming deal to supply MPK Garages. This adds to an existing list of partners including Rontec, Sandpiper and McColl's.Emma-Lou Montgomery, associate director at Fidelity Personal Investing’s share dealing service, said: “Morrisons has high hopes that wonky carrots and parsnips will be on shoppers' lists this Christmas as it showed today that it's holding its own in the competitive supermarket sector.“Morrisons is clearly open to new opportunities and its wholesale business is growing as today’s trading update show. It already delivers via Ocado and supplies corner shops and Amazon. But Amazon ultimately remains the enemy of the sector, not an ally. "Pressure is continuing to mount, as we’ve seen, with Sainsbury’s buying up Argos and now Asda in an attempt to beef up its operations. And that’s not forgetting the double-pronged threat from German discounters Aldi and Lidl, which Morrisons is well aware of.”Laith Khalaf, senior analyst at Hargreaves Lansdown, added: "The summer consumer glut has worn off at Morrisons, and leaves recent performance looking more pedestrian by comparison. Sales were behind expectations, with transaction growth in Morrisons supermarkets barely visible, and so the market has taken a red pen to the share price."Sales are still heading in the right direction, but it’s the wholesale business holding growth up. Selling goods to the likes of McColl’s newsagents and Amazon is lower margin, so doesn’t feed through to the bottom line quite so well, though strategically this business adds another string to the Morrisons bow."That’s important given the round of re-invention we have seen in the supermarket sector, with Tesco buying Booker and Sainsbury's and Asda looking to tie the knot. The discounters are still applying pressure, particularly at the value end of the market Morrisons trades in, so there’s no time to sit on any laurels."

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