Morrisons says it’s tough despite triple boost

Chief executive Dalton Philips said: “Consumer confidence is down. I don’t see it picking up any time soon. I don’t see any respite for the rest of this year. I think it’s going to be tough.”

The Bradford-based supermarket beat sales forecasts in the 13 weeks to May 1 with a 2.5 per cent increase in like-for-like sales.

But the group said February and March were tougher and more representative of trading going forward.

“The second quarter is going to be tough,” said Mr Philips. “People’s budgets are being stretched and they are looking to save. The royal wedding and Easter was a temporary event.” Sales were boosted by promotions, such as Morrisons’ ‘Fuel Britannia’ campaign which offered customers 6p off the price of a litre of petrol if they spent £40 in store.

Analysts at Evolution Securities said Morrisons’ marketing is the best in the sector, typified by the ‘Fuel Britannia’ promotion.

“It’s better for consumers to reduce the price of petrol by 6p a litre than cut the price of milk or bananas by 6p. Contrast the Morrisons’ approach to petrol with Tesco’s.

“Tesco now treats petrol as a profit centre rather than as an enticement for consumers to visit their stores,” said Evolution analyst Dave McCarthy.

Mr Philips said the group sold 150 miles of bunting in the run-up to the royal wedding, adding that Prime Minister David Cameron and his wife Samantha used Morrisons’ bunting and flags for their Downing Street party.

During the royal wedding weekend, sales of party food rose by 300 per cent. At the other end of the market sales of bin bags rose 30 per cent.

“It wasn’t bigger than Christmas but it was really close,” said Mr Philips. “The Thursdays before Easter and the royal wedding were very strong, but this is a one-off due to the weather, the royal wedding and Easter.”