Morrisons sales fall worsens over Christmas

The UK’s fourth-biggest grocer behind market leader Tesco, Wal-Mart’s Asda, and Sainsbury’s, said today sales at stores open over a year, excluding fuel and VAT sales tax, fell 2.5 per cent in the six weeks to December 30.

That was worse than a fall of 2.1 per cent in its fiscal third quarter and compared with analyst forecasts in a range of down 2-3 per cent.

“In a difficult market our sales performance was lower than anticipated,” said chief executive Dalton Philips.

“Notwithstanding these difficult market conditions, which we expect to continue through 2013, our sales performance in the period was disappointing,” he said.

Analysts had expected Bradford-headquartered Morrisons to produce the worst performance of the three major British grocers reporting Christmas figures this week, partly reflecting its lack of an online presence and minimal convenience store offer.

Sainsbury’s reports third-quarter sales on Wednesday, while Tesco publishes Christmas figures on Thursday.

Philips said the disappointing performance reflected both the need to improve the firm’s promotional innovation and the communication of its points of difference, which it highlighted in November, as well as the increasing importance of other channels, such as online and convenience, which Morrisons has only recently entered.

The group said the Christmas period had continued to be challenging, with customers shopping to a budget and relying on vouchers.

“Through the self help available to us we have managed our business tightly and accordingly the board believes that our full year performance will be broadly in line with its expectations,” added the firm.

Many of Britain’s store groups are finding the going tough as consumers fret over job security and a squeeze on incomes.

Grocers traditionally cope better in tough economic times thanks to their focus on essential goods but even they are finding growth hard to come by.

Morrisons’ total sales over the six week period fell 0.9 per cent. It forecast year end net debt of £2.1bn - £2.2bn.

Shares in Morrisons, down 20 per cent over the last year, closed Friday at 257 pence, valuing the business at about £6.04bn.