Morrisons has reported a slower-than-expected rise in first quarter sales in what it described as a “competitive and challenging” market.
Over the 13 weeks to 5 May, the group’s overall like-for-like sales were up 2.3%. This was slightly below analysts’ expectations of a 2.5% rise and weaker than the 3.8% growth delivered in the previous quarter. The slowdown was seen in both its retail (+0.2%) and wholesale (+2.1%) divisions.
Morrisons stated that political and economic uncertainty was continuing to impact consumer confidence, although sales during the Easter period were “strong”, with like-for-likes up 1.7% on last year and 3.4% on a two-year basis.
The grocer highlighted further progress in its wholesale business with the first McColl’s conversions to the Morrisons Daily format completed. MPK forecourt conversions to both Morrisons Daily and Safeway Daily were also said to have started well, with strong sales increases.
The group warned of further tough times ahead and flagged the difficulty in matching last year’s strong second quarter, which was boosted by the World Cup and favourable summer weather. “However, we remain confident that Morrisons still has many sales and profit growth opportunities ahead, and continue to expect that growth to be both meaningful and sustainable,” it concluded.
NAM Implications:
- Key issue is how this Morrisons’ trend will develop, given increased Brexit uncertainty, EU elections…
- Combined with Sainsbury’s post-Asda drive to recover share…
- …and probable retaliation by a resurgent Tesco, and an Asda newly released from any Sainsbury’s restraints…
- While the discounters and Amazon plough on regardless.
- Best for Morrisons’ NAMs to factor in more of the same, rather than any improvement.
