Morrisons lost out to rivals at Christmas after discount shoppers failed to switch from Aldi and Lidl for their festive shopping, chief executive Dalton Philips has admitted.

Morrisons today issued a surprised Christmas update which revealed like-for-likes fell 5.6% over six weeks to January 5 and warned full-year profits would be at the lower end of expectations.

Philips said Morrisons has a greater number of customers than its major grocery rivals who switch from discounters at Christmas for full shops and those shoppers failed to switch.

He told Retail Week: “Those customers are primarily discount shoppers who normally trade up into us at Christmas but we did not see that trade up this year.”

He added: “We are not a discounter, we offer more than a discounter. We can guarantee the provenance and have a wider range but it is a challenge we need to face into.”

Aldi has said it achieved its strongest Christmas in the UK to date.

Philips said Morrisons’ lack of exposure in the rapidly growing convenience channel was also a key factor. “The winners this Christmas have definitely had strong online and convenience sales and you have seen that in our competitors numbers. The Co-op, Tesco and J Sainsbury’s have reported strong convenience numbers and the same for online.”

Philips declined to comment on whether his position is under pressure following a promise in November to grow like-for-like sales in the fourth quarter.

He said: “I’m disappointed with our sales performance. When I spoke it was in the context of rising sales, we were feeling good and had a strong Christmas programme in place… 2014 is a big year for us.”

Philips said Morrisons also lost out to online grocery players and targeted offers from rivals and revealed Morrisons would begin a trial of an undisclosed marketing ploy to “open a direct one to one dialogue” with shoppers in the next six to eight weeks.

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Morrisons' Christmas like-for-likes slump 5.6%