Morrisons sales take a slight dip in first quarter

As household incomes are squeezed, Morrisons has suffered a slight reduction in the like-for-likes.

by Michael Northcott
Last Updated: 19 Aug 2013

The supermarket has enjoyed growing market share in recent years thanks to an aggressive marketing campaign and constant undercutting of its major league competitors such as Tesco and Sainsbury’s, but the retailer has had a disappointing first quarter with like-for-like sales down 1% across the whole chain.

The figures don’t include new stores, but if you do include them, sales are actually up 1.5%, or if you include fuel sales, even better at 3.1%, all on a year ago. The like-for-likes are the key indicator however, and given the fast-paced war of cost cutting by budget rival Asda, it is clear that that Morrisons has ceded some ground. 

Part of the issue is that the mid-market grocers are fighting to get ahead in a shrinking market. As people’s wallets are drowned by rising oil and energy prices, scrimping and saving on treats at the supermarket is a natural consequence. It also can’t be ignored that Morrisons’ heartland is in the especially cash-strapped north and unlike its rivals it doesn’t have as wide a footprint in the south.

Whilst the first quarter will be disappointing for management, it is worth remembering that the chain actually did rather well last year. Turnover was up 7% to £17.7bn in the year to 29 January 2012, with profits up 8% to £935m. With a bunch of extra stores under its belt (it opened 34 last year), the firm could well get some traction once the post-Christmas retail blues recede and the public feel capable of spending more. 

In its announcement the firm gave a rather perfunctory analysis: ‘Morrisons has made a satisfactory start to its new financial year.’ But it does expect to continue achieving profitable growth. It’s not ideal, but a 1% dip is hardly a car crash, and it happened to Tesco just a few weeks ago. Of course Morrisons could struggle to maintain its sang froid if the next quarter isn't better...

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