Morrisons slows slide in sales

Struggling supermarket Morrisons remains under pressure despite a slowdown in the pace of recent sales falls.

The latest decline in underlying sales of 1.8% was roughly in line with City expectations for the three months to May 5, after suffering a fall of 4.1% in the previous quarter.

The grocer said plans to launch an online food operation by January 2014 were "progressing" and it was continuing partnership discussions with internet retailer Ocado.

Chief executive Dalton Philips admitted that the supermarket was two decades behind its competitors who have had an internet presence since the 1990s.

Shares opened lower as analysts said they remained unconvinced by the chain's performance, with Clive Black of Shore Capital retaining his 'sell' rating and noting it would take some years for investment in online, non-food and convenience stores to pay off.

In the wake of a 7% drop in full-year profits to £879 million, it emerged this week that Mr Philips missed out on his annual bonus as a result of the below-par trading. He said that the Bradford-based chain had made a solid start to the new financial year: "Our promotions have been more innovative and we are explaining Morrisons points of difference more effectively."

He said the horse meat scandal had boosted customer recognition that the company's supply chain arrangement meant it was "best placed to sell food that is what it says it is".

Mr Philips added: "Strategically, our ambition of building a genuinely multi-format, multi-channel Morrisons is right on track." The supermarket said that while it remained "cautious" about the economic outlook and consumer spending, full-year expectations were unchanged.

Figures from last month showed its market share had shrunk to 11.5% from 11.9% a year earlier. It has suffered from squeezed household budgets, weak advertising and pressure from rivals. Morrisons said the industry remained "very competitive".

John Ibbotson, director of retail consultancy Retail Vision, said Morrisons was being "consistently outpaced" by rivals Tesco, Asda and Sainsbury's while losing customers to discount chains Aldi and Lidl in its northern heartlands.

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