Morrisons outshines rivals with Christmas figures

The Bradford-based group said the like-for-like sales hike, excluding fuel, came after stores attracted a record number of customers over the six weeks to January 3.

Morrisons - whose highly regarded chief executive Marc Bolland is quitting to join Marks & Spencer - beat the 4.9 per cent sales growth reported by market leader Tesco and the 4.2 per cent posted by Sainsbury's, although Asda has yet to report numbers.

But Morrisons added to the cautious 2010 outlook for retailers as it said the group continues to believe the market will remain "challenging".

Morrisons has been reaping the rewards of a turnaround plan led by Mr Bolland in recent years.

But his departure leaves a cloud of uncertainty around the UK's fourth biggest supermarket. Mr Bolland is on gardening leave after his shock departure announcement last year to become the head of M&S.

Morrisons said today it is in talks with Mr Bolland over his official departure date.

He is locked into a year's notice period until November, but negotiations are ongoing over an early exit "compromise agreement", according to the group.

Morrisons chairman Sir Ian Gibson added that plans to replace Mr Bolland are "progressing well".

Christmas sales for the group showed strong demand for party food, with sales of products such as canapes and sausage rolls up 90 per cent, while it confirmed the trend to "trade up" seen by many of its rivals.

But Morrisons said it did not believe consumers would continue switching to premium lines for their weekly shop throughout 2010, with an expected squeeze on spending over the year ahead.

"Consumers have enjoyed their Christmas, but I don't think it's going to change the fact that value will continue to be at the forefront," said finance director Richard Pennycook.

He added: "People will continue to have some pressure on disposable incomes and we are planning for 2010 to be similar to what we have seen in the last 18 months."

The Christmas sales performance helped Morrisons steal greater market share over the period, up from 11.8% a year ago to 12.3 per cent, according to recent figures from research firm TNS Worldpanel.

But the 6.5 per cent growth marked a slowdown on last year's 8.2 per cent rise, reflecting the easing in food price inflation that is depressing sales increases across the sector.

Morrisons - whose Christmas adverts featured celebrities Richard Hammond and Denise Van Outen - said it was also boosted by a 25 Christmas loyalty voucher scheme for customers.

Shares eased nearly 2% today amid disappointment that the festive trading performance failed to result in earnings upgrades.

But Justin Scarborough at Royal Bank of Scotland added: "While the numbers are just in line with our expectations, the strong sales momentum again shows that the group's strategy is clearly working well."

Morrisons began life as a market stall in 1899. It now has 422 stores and around 120,000 staff.