Morrisons sales up for first time in 18 months

Press Association
Inside A Morrisons Supermarket Ahead Of Preliminary Results
Inside A Morrisons Supermarket Ahead Of Preliminary Results

Morrisons grew sales for the first time in nearly 18 months in a welcome sign of recovery at the struggling supermarket chain, according to new figures.

But the encouraging sales performance comes as Morrisons looks set for a humiliating relegation from London's top share index in a testing week for new boss David Potts.

Industry figures from Kantar Worldpanel show the Bradford-based retailer saw sales edge 0.1% higher in the 12 weeks to May 24 compared with a year earlier.

This was the first increase since December 2013, with the group also the only one of the Big Four supermarkets to see sales rise over the three months.

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The sales figures will provide a boost to Mr Potts as he prepares to face shareholders at the supermarket's annual general meeting on Thursday, although they come as Morrisons faces being kicked out of the FTSE 100 for the first time in more than 14 years.

The latest FTSE reshuffle, which is based on today's closing share prices, is expected to see Morrisons lose its place in the top tier to make way for satellite company Inmarsat when the changes take effect on June 22.

Kantar said the turnaround plan at Morrisons was being helped by recent initiatives and online sales.

Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, said: "A committed core of loyal Morrisons consumers is responding positively to recent initiatives and business has been boosted by online sales."

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But he added: "Morrisons' performance is an improvement on what was a difficult May 2014, so this is only the first step in any future recovery."

Morrisons held its market share at 10.9%, while its main rivals Tesco and Asda suffered falls as they continued to come under pressure from discounters Aldi and Lidl.

Tesco's market share dropped to 28.6% in the 12 weeks, down from 29% a year earlier, as sales fell 1.3% while Asda saw its share fall to 16.6% from 17.1% after a 2.4% sales slide.

Sainsbury's maintained its share at 16.5% despite a 0.3% fall in sales, according to Kantar.

Lidl reached a new record high market share of 3.9%, up from 3.6% last year, thanks to sales growth of 8.8%.

Kantar said Lidl's growth was fuelled by a combination of more consumers visiting the stores and the average basket containing more items, suggesting a growing trend for consumers to move their bigger shopping trips to the so called discounters.

Aldi also grew sales by 15.7%, taking its share of the market to 5.4%, according to Kantar.

Retail analysts at Jefferies said the fight-back at Morrisons was beginning to gain traction.

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In a note, they said: "We suspect that the re-investment into store personnel and the Match & More scheme are both starting to have an impact."

Mr Potts took the helm in March, replacing Dalton Philips, who was ousted in January after sliding profits and sales.

Thursday's annual meeting will be watched with keen interest after last year's AGM saw Mr Philips submitted to a humiliating dressing-down in front of shareholders by former chairman Sir Ken Morrison.

Sir Ken described Mr Philips's strategy as "bullshit", as the then-boss faced intense pressure amid sliding sales and a fierce supermarket price war.

It is expected that Sir Ken will be in attendance at this year's Bradford-based meeting, with other family members, who are thought likely to vent their anger at the £2.1 million paid to Mr Philips last year, plus a £1.1 million payoff.

They will no doubt also be less than pleased at the group's potential demotion to the FTSE 250, with the reshuffle results due to be confirmed tomorrow.

Morrisons has been part of the top flight since April 2001.

Bank note printer De La Rue is also in line for a demotion in the reshuffle, with its recent share price falls expected to see it fall out of the FTSE 250 into the small cap index.

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