•  Total sales up 0.3%, ex. fuel
  •  LFL sales down 1.8%, ex. fuel
  •  Reafirms FY outlook 
Morrisons sales decline slows in Q1

Morrisons sales decline slows in Q1

UK retailer Morrisons insisted this morning (9 May) it is off to a "solid start" to its financial year despite a decline in underlying sales during the first quarter.

In the three months to 5 May, Morrisons revealed like-for-like sales fell 1.8%, or 2.6% including fuel. Total sales edged up 0.6%, but fell 0.3% including fuel.

The company said the performance reflects a "steady improvement" from the previous trading period. In fiscal 2012, the group saw like-for-like sales drop 2.1%, excluding fuel.

According to Morrisons, the group has been losing share in the UK grocery market because it has failed to effectively communicate its offer and its loyalty programmes have failed to hit the mark. In order to address these issues, the supermarket operator has introduced a new advertising campaign - called "more of what matters" - and a new loyalty scheme - called "payday bonus". The group said that these initiatives, along with a sharper focus on execution and a move to open more new stores, have slowed its sales decline.

Morrisons said the performance was in line with expectations and insisted that its full-year outlook remained upchanged. 

Despite the upbeat tone of the trading update, investors reacted unfavourably to the continuing sales slide and shares in the group were down 2.29% at 10am (BST).

Click here for a flavour of what analysts thought of Morrisons' trading update.

And click here for coverage of Morrisons' press conference call, in which CEO Dalton Philips highlighted progress in fresh food.

Show the press release

 

Wm Morrison Supermarkets PLC

Q1 Interim Management Statement – 13 weeks to 5 May 2013

 

Morrisons has made a solid start to the new financial year.

 

Total sales* excluding fuel were up by 0.6% (down 0.3% including fuel) and like for like sales* were down 1.8% (2.6% including fuel).  This performance (excluding fuel) reflects a steady improvement from the previous quarter and is in line with our expectations.

 

Throughout the quarter the industry has remained very competitive with couponing again a significant factor.  We have continued to focus on communicating our points of difference more clearly and sharpening our promotional programme.

 

Our ‘More of What Matters’ campaign has helped us communicate the benefits of  Morrisons vertically integrated business, craft skills and affordable fresh food offer. These points of difference particularly resonated with customers during the recent horsemeat scandal - the Food Standards Agency’s rigorous testing programme found no adulteration of Morrisons products with horsemeat. Customers now understand  our unique approach to sourcing meat through our own livestock buyers and abattoirs. 

 

We have also invested in price where it matters most to our customers. Our Pick of the Street offers provide outstanding value on fresh products, while our Payday Bonus introduced a simple and effective reward for loyalty at the end of the month.

 

We also continued to make good progress in the delivery of our strategic and operating initiatives, which will enable us to drive our topline, increase efficiency and capture growth.

 

During the quarter we opened a further six stores, including two Morrisons M locals and also acquired over 80 stores to add to our convenience pipeline.  We are on track to meet our target of having 100 convenience stores open by the end of the year, with 20 opening in the first half. 

 

Our Fresh Format concept continues to be tailored to new and existing stores and will have been implemented in over 40% of the estate by the end of the current financial year.  Customer feedback continues to be extremely positive. Nutmeg, our affordable and easy-to-shop children’s clothing range is now available in over 100 stores.

 

Our plans to launch our first online food operation by January 2014 are progressing.  Discussions with Ocado, previously announced, continue and a further announcement will be made as appropriate. 

 

A detailed update on all these initiatives will be provided at our Interim Results in September.

 

Our net debt of £2.3bn is in line with expectations and the financial position of the Group remains strong.

 

Dalton Philips, Chief Executive, said:

 

We have made a solid start to the year, with our sales performance improving since the last quarter.  Our promotions have been more innovative and we are explaining Morrisons points of difference more effectively.  These efforts were further reinforced by the horsemeat scandal which helped drive increasing customer recognition of Morrisons unique supply chain and approach to meat sourcing. They now understand that Morrisons is best placed to sell food that is what it says it is.

 

Strategically, our ambition of building a genuinely multi-format, multi-channel Morrisons is right on track.”

 

Outlook

 

Although we remain cautious on the economic environment and consumer spending, our full year expectations remain unchanged.

 

 

Original source: Morrisons