More bad news for Morrisons - but on the bright side, share price is up

Shareholders let out a collective 'meh' this morning, after Morrisons posted figures showing sales fell 7.1% in the first quarter.

by Emma Haslett
Last Updated: 03 Jun 2014

More dolorous news from Morrisons, which was last week fondly described by its former property chief as a ‘supertanker heading for an iceberg’ (or mist-soaked iceberg lettuce, anyway): like-for-like sales were down by 7.1% in the 13 weeks to May 4. Including fuel, that figure was more like 4.2%.

It’s the latest in a long and fraying string of bad news stories, essentially caused by the fact that, like Tesco, Morrisons is struggling to compete with the Aldis and Lidls of this world. The difference between Morrisons and Tesco being that Tesco was an early player in the online retail world. Morrisons has only just got itself a proper website.

Last week, the supermarket finally took the bull by the horns and accepted its destiny: heavy discounting. It cut 1,200 products by an average of 17% - although it’s unlikely that will allow it to compete particularly well with the proper discounters, who a) can make the most of economies of scale because they have presences in vast swathes of Europe and b) don’t mind selling products with exotic foreign text on them – so don’t have to persuade suppliers to push up costs by shelling out for language-specific packaging.

Shareholders, though, didn’t seem particularly upset by the news. Perhaps that’s because the results weren’t as bad as expected – or perhaps it’s because chief executive Dalton Philips said its price-cutting strategy is ‘on track’.

‘The reaction of our customers to the 1,200 ‘I’m Cheaper price cuts we announced last week has been very positive,’ he said (baguettes projected across the Angel of the North notwithstanding).

‘Although it will take time for their full impact to be felt, we are confident that these meaningful and permanent reductions in our prices will enable our clear points of difference to resonate strongly with consumers.’ Chin up, chaps…

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