Morrisons reports sales lift

The Bradford-based supermarket chain said a 2.5 per cent rise in like-for-like sales for the 13 weeks to May 1 represented an “encouraging start” to its financial year, with sales growth ahead of the rest of the market.

Despite the trading progress, Morrisons said the current squeeze on disposable incomes meant it remained cautious about prospects going forward.

The chain has responded to the conditions with a series of promotions, including its Fuel Britannia petrol offer, under which it has offered customers 6p off every litre of fuel when they spend £40 or more in store.

It has also followed a series of price promotions at the start of the year with “Let’s Celebrate” campaigns for Easter and the royal wedding.

Seymour Pierce retail analyst Kate Calvert said the sales figures were ahead of market expectations, helped by good weather towards the end of the period.

However, she added: “With inflation running at towards three per cent in-store, we estimate, this implies volumes were flat to slightly negative reflecting the difficult trading environment the industry has been experiencing this year.”

She now expects Morrisons to report pre-tax profits of £933m in the current financial year, slightly down on the broker’s previous forecast.

Recent market research figures from Kantar Worldpanel showed Morrisons was the only one of the main players to increase market share in the 12 weeks to April 18, to 11.9 per cent from 11.8 per cent a year earlier.

The trading boost comes as new chief executive Dalton Philips attempts to boost the chain’s position in internet and convenience store shopping.

He has pledged to launch an online shopping operation within two years after earmarking £3bn in investment to catch up with web-savvy rivals.

The group is also seen as a potential bidder for frozen food chain Iceland, which is reportedly about to be put on the sale block.