Festive win for Morrisons
Jan 23 2008 by Iain Laing, The Journal
MORRISONS has emerged as the Christmas winner among the UK’s “big four” supermarkets after tempting in more than four million extra customers over the festive period.
The chain saw like-for-like sales excluding petrol soar 9.5% in the six weeks to January 6 – well above the 7% expected by analysts – and enjoyed record trading across its 375 stores.
Morrisons has been buoyed by a price-cutting drive and an advertising campaign fronted by singer Lulu and football pundit Alan Hansen.
Its update comes after the UK’s biggest grocer, Tesco, disappointed the market last week with sales figures, although Sainsbury’s posted a solid festive performance.
Morrisons chief executive Marc Bolland said he was “delighted” with the Christmas trading, which helped the group steal ground on its rivals.
Mr Bolland has been charged with leading the turnaround of the UK’s fourth-biggest supermarket chain, which has struggled since its acquisition of Safeway in 2004.
But the revival is now firmly under way after Morrisons enjoyed the biggest market share growth in December, up from 11% last year to 11.4%, according to monthly research from TNS Worldpanel.
Alongside its high-profile advertising campaign and an ongoing £450m store overhaul, Morrisons has emphasised its British pork and lamb and the group’s commitment to sell fresh fish.
Mr Bolland added: “We welcomed significantly more customers to our stores, and they were well served with attractive offers and great fresh food.”
A staff discount scheme for the group’s 114,000 employees introduced in November also accounted for 1.5% of the festive sales growth.
Morrisons said the group “had built momentum steadily” throughout 2007, although it cautioned over a difficult consumer spending outlook and expects competition to remain tight.
But the supermarket anticipates profits at the top end of expectations following the strong trading performance, also helped by the deferral of £30m in costs from its improvement programme until the next financial year.
This leaves the chain likely to beat current consensus profit forecasts of £524m for the year to February 3.
The supermarket, which began life as a Bradford market stall in 1899, has already bettered market expectations with half-year profits of £266.3m in the six months to July 29.
On a second turbulent day for the FTSE 100 Index, Morrisons’ shares were down 1%, outperforming a 2% decline in the wider market.
Seymour Pierce analyst Andrew Wade described the supermarket’s update as “very impressive”.
Mr Wade said: “The extent to which Morrison has outperformed its peers through Christmas is a surprise.”
