Morrisons appears to be making progress on its road to recovery after reporting a second consecutive quarter of like-for-like sales growth after years of stagnation. .
During the 13 weeks to 1 May, the group’s like-for-like sales rose 0.7%, up from the 0.1% rise reported the previous quarter. Total sales were down 1.8%, reflecting the impact of supermarket closures and the disposal of its M local chain last year.
The group said that improvements to its offer made in recent months were proving popular with its customers. LFL transactions were up 3.1% in the quarter and LFL volume growth was said to be “strong”. Morrisons added that prices were down 2.6% from a year earlier as the supermarket price war continued.
The group said that transaction growth was in part driven by an increase in sales of Food to Go (up over 17% year-on-year) following the launch of new and improved products. However, it said that new express and self checkouts had impacted on items per basket, which were down 2.8% in the quarter.
The ‘Morrisons Makes It’ programme aimed at highlighting its food maker and shopkeeper strengths was also launched in the quarter.
David Potts, Chief Executive, commented: “We are encouraged by progress across our six priorities,” adding that there was still much to do to improve the shopping trip and its competiveness.
He said: “We are of course pleased with a second consecutive quarter of positive LFL sales, which demonstrates our aim to stabilise trade is taking effect.”
Mirroring comments made by Sainsbury’s Chief Executive yesterday, Morrisons said it expected to see continuing deflation in the market and that growing LFL volumes remained a key priority.
Commenting the results, Clive Black, analyst at Shore Capital, said Morrisons was making “encouraging progress”.
He added: “In a patient and methodical manner Mr Potts has worked his way through a long ‘to do’ list. Store standards have been improved, product on offer has been enhanced, merchandising has been developed and customer service is better.”
Meanwhile, John Ibbotson at retail consultants, Retail Vision, said: “Hats off to David Potts, he appears to have stopped the rot. Lower prices and the well marketed ‘Morrisons Makes It’ programme has stemmed the haemorrhaging of customers to Aldi, Lidl and Asda.”
He added: “The once beleaguered grocer is finally moving in the right direction, although we should not hide from the fact that there is still a long way to go,” highlighting the fact that the discounters are still opening stores, food deflation is entrenched and Asda remains an ominous threat.
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