Morrisons CEO Dalton Philips was circumspect about the retailer’s prospects for the rest of the year despite a successful first quarter, expecting the rest of fiscal 2011 to be “tough” as consumers tighten their belts.
He said today (5 May) that the retailer “judged the mood of the nation” during its first quarter, with the rise in consumer confidence around Easter and the Royal Wedding merely a “blip”.
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During February and March, consumers were “feeling very stretched” and “were getting really squeezed”, the Morrisons chief said, so the retailer’s Price Crunch campaign was “exactly the right thing to do”. However, as the recent good weather, Easter and the Royal Wedding hit, “people wanted to get out there and picnic and party”, he added.
The retailer had its “two biggest days of the year outside” of Christmas in the past ten days with the Thursday before Easter and the Thursday before the Royal Wedding providing a significant boost to sales, with Philips saying that sales of products like party food were up 300%.
However, UK consumers, Philips argued, were set to “tighten it right back up again”.
The comments came as the retailer’s first-quarter sales beat analyst estimates, rising 4.2% excluidng fuel. Like-for-like sales, execluding fuel, were up 2.5%.
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By GlobalDataThe Morrisons boss said the retailer “got it right” during the first quarter, but that it has to “start all over again” in the second quarter, and expects trading during the quarter to be “tough”.
Philips said that consumers have returned to “feeling stretched”, and Morrisons has responded by returning to its Price Crunch offer, which he emphasised offers “good solid pricing, no gimmicks”.
While declining to comment directly on Asda and Tesco‘s price comparison schemes, Philips said that customers are looking for “good, convenient shopping”, as well as “fantastic value”.
Philips added: “We give it to them and they get it right there at the point of purchase and it’s working for us.”
The Morrisons CEO does not expect any respite in the form of an improvement in consumer confidence any time this year. “Consumer confidence is down, April versus March. I don’t see it picking up any time soon, and we’re conditioning our offer to that.”
For the remainder of the year, the retailer plans to continue to “grow ahead of the market” through “great pricing, background pricing, very strong industry leading offers and a superb execution through its instore offer,” said Philips.
Shares in the retailer were up 1.2% to 303.9p a share at 10:39 BST.
