Morrisons like-for-likes drop 2.6% in third quarter as it cuts voucher activity

Like-for-likes excluding fuel were down 2.6% in the third quarter ended November 1, while total sales excluding fuel were down 2%.

The latest drop in like-for-likes comes after a 2.9% and 2.4% fall in the first and second quarters respectively.

Morrisons said it continues to invest in lowering prices, which has resulted in deflation excluding fuel of 2.2% for the quarter.

The grocer has also reduced the number of vouchers, which it said impacted year-on-year third-quarter sales by 2.4%. Morrisons has warned that reducing vouchers will impact sales “by more” towards the end of the quarter.

Morrisons chief executive David Potts said: “The business is moving at pace on the long journey towards improving the shopping trip for customers.

“Our priorities for the rest of the year are unchanged – to stabilise trading, reduce costs and further improve the capability of the leadership team. We are making good progress in many areas and customers are noticing improvements.”

Morrisons also claims there was “good progress during the quarter against many aspects of our plan” and added customer satisfaction scores were ahead of last year.

Net debt was £2.1bn at the end of the third quarter, while Morrisons now expects net debt at year-end to be lower than previous guidance of £1.9bn to £2.1bn.

As previously guided, Morrisons expects underlying profit before tax to be higher in the second half of 2015/16 than the first.

Morrisons forecasts net new space sales growth of around 0.5% for the financial year, following the closure of 11 supermarkets and the sale of its 140 M Local convenience stores.

Depreciation is now expected to be around £390m for the year.