Morrisons beats expectations over Christmas and plans seven store closures

The supermarket giant, whose sales bettered City expectations, said the number of same-store transactions rose 1.3% during the nine weeks to January 3, while online sales almost doubled year on year, as it continued to woo back shoppers.

But while like-for-likes excluding fuel advanced, total sales were down 1.2% as the grocer continued to invest in price. The number of items per basket fell 3.6%. Sales contribution from net new space was down 1.4%, following the disposal of its M Local convenience stores.

The retailer said it has entered into consultation to close another seven supermarkets, but insisted there were “no further plans” for a programme of store closures. It comes after Morrisons revealed in September that it would shut 11 stores, putting 900 jobs at risk.

Beating expectations

Morrisons is the first of the big four grocers to report its Christmas trading figures and has beaten expectations. Analysts predicted the retailer would post a drop in like-for-like sales of around 2%.

Sainsbury’s will report its Christmas sales update tomorrow, before market leader Tesco unveils its festive performance on Thursday. Walmart-owned Asda reports its next quarterly update next month.

Morrisons has kicked off the busy period of grocery updates by lauding the work it has done to win back customers during the festive season. The retailer has focused on improving the shopping experience and said customer satisfaction levels were “significantly ahead” of last year.

The grocer also continued to slash prices, driving food price deflation of 3.2% during the nine-week period. Morrisons said it participated in less promotional activity this Christmas, switching its focus from multi-save deals to everyday value.

It added that like-for-like sales in premium products and a “successful” rejig of the beers, wines and spirits category also helped drive sales.

Morrisons boss David Potts said: “We are pleased with our improved trading performance over the Christmas period. While there is of course much more to do, we are making important progress in improving all aspects of the shopping trip, and our customers tell us they are pleased with the changes. In addition, we have made further progress in debt reduction, and our financial position is strong and getting stronger.”

Senior team

Potts, who took the reins last year, has now completed the reshaping of his executive committee after hiring Andy Atkinson as the grocer’s new group marketing and customer director.

Atkinson had been in the role on an interim basis until today, having previously held several senior commercial roles at the grocer during the past four years.

Morrisons added that around 800 head office roles have been removed since the start of the 205/16 financial year and it will continue the process of “simplifying and speeding up the business” by bringing a number of teams, including maintenance, in-house.

The grocer said its office restructuring and store closure costs would reach £60m, the upper end of the previously guided £50m to £60m range. It added that full-year underlying profit before tax would be in the range of £295m to £310m, before those costs were accounted for.