Morrisons enjoys best Christmas sales for seven years

The chain upped its full-year profit outlook after the better-than-expected sales hike for the nine weeks to January 1, pencilling in underlying pre-tax profits of between £330 million to £340 million.

David Potts, chief executive of Morrisons, said: “Eighteen months ago I said that this would be a colleague-led turnaround, and our improving performance is entirely due to the continuing hard work of the Morrisons team of food makers and shopkeepers.”

Its expected underlying profits for the year to the end of January would mark a significant rise on the £242 million posted a year earlier.

Morrisons, which has been seeing a steady recovery in sales thanks to an overhaul being led by Mr Potts, said its online arm contributed 0.6% to the like-for-like sales hike over the nine-week period.

Mr Potts said customers “splashed out” over Christmas, with strong demand for its new premium Best range as they traded up for their festive food.

The group saw ongoing falls in food prices during the season as the sector continues to wage a fierce price war, although the pace of declines slowed to 0.2% year-on-year and was flat on the previous three months.

Morrisons said any price pressure was also offset by a 5.2% leap in the number of sales through its tills.

Mr Potts said, while the group remained “firmly in fix mode”, he was “delighted to have found our form”.

“Our customers are responding as we turn this great British business around,” he added.

Phil Dorrell, partner at Retail Remedy retail consultants, said: “Morrisons like-for-like sales growth over Christmas is quite remarkable and all the more noteworthy coming on top of last year’ like-for-like growth. Potts has turned this ship around and whilst navigating a big tanker like this takes time his grip on the tiller is both clear and strong.

“Morrison’s Christmas marketing campaign was fresh and delivered a relevant food quality feel. ‘Morrison’s Makes It’ was well integrated across all channels and was a nice point of difference that Morrison’s will no doubt continue to exploit.

“The non-food areas were well set up with good availability. Conversely fresh, BWS and core grocery suffered the worst real world availability of all the Big 4, consistently weak over time and across the country as witnessed by the Retail Remedy team. Availability is a significant problem but the fact that Morrisons have delivered significant growth without it offers an impressive opportunity for their new ordering system for 2017. The competition should be concerned.

“Are Morrison’s just becoming an imitation of Tesco’s in the early naughties? No, that would be to underplay the vertical nature of Morrison’s business and the focus on pure retail. Yet with all the key departments having strong leadership from ex-Tesco people, it is not hard to see the potential direction of travel albeit with wiser and more cautious leadership.”