Morrisons sees shoppers come flooding back
Sales over three months beat forecasts
MORRISONS HAS announced better than expected sales over the past three months, boosted by price cuts and strong trading over Valentine’s Day, Mother’s Day and Easter.
The Bradford-based supermarket chain said like-for-like sales rose 3.4 per cent in the three months to April 30, considerably ahead of analysts’ expectations of 1.7 to 2.0 per cent growth. It was also an improvement on the previous quarter’s 2.9 per cent increase.
Total sales, excluding fuel, rose 2.8 per cent, reflecting the impact of last year’s store closures.
Morrisons said it is attracting more customers although there was some inflation during the period, as imported food prices were affected by lower sterling. It introduced another wave of ‘Price Crunch’ lower prices earlier this week.
Chief executive David Potts said the group saw an extra half a million customers a week during the quarter.
“We are working hard on providing the best possible prices for customers,” he said.
“We are ultimately becoming a place customers quite like to go.”
The group reported improved satisfaction levels, introduced shorter queues during the busiest periods such as Easter and a new ordering system.
It has extended its ‘The Best’ range of upmarket products, which is attracting more affluent customers.
Over Easter it sold 40,000 packs of ‘The Best Slow Cooked Lamb Shanks with Rioja Red Wine Sauce’ and 63,000 ‘The Best Easter Eggs’, double the number sold last year.
Morrisons introduced a further 50 ‘The Best’ products for Easter and the group aims to have a range of 1,000 ‘The Best’ products.
Customers are expected to tighten their belts this year amid slowing wage growth and higher food prices. One of the first areas to be sacrificed in straitened times is dining out so Morrisons is hoping to attract people who want a special meal at home.
Analysts said Morrisons is outperforming its peers.
John Ibbotson, director of retail consultancy Retail Vision, said: “A year ago such a stunning turnaround seemed improbable at best, a fantasy at worst. As the smallest of the big four, and with a low price model that put it perilously close to the discounters’ territory, Morrisons had everything to lose from the Aldi and Lidl insurgency.
“The introduction of the ‘Best’ premium own brand range and more healthy options has pulled in more affluent shoppers, and the focus on good value, fresh food has successfully driven a wedge between Morrisons and the discounters.”
Analyst George Salmon at Hargreaves Lansdown added: “There is a long road ahead of the UK’s supermarkets, but of the three major players, Morrisons seems to be in the highest gear. Customers are flocking back, and likefor-like sales growth is trending strongly upwards.
“The transformation, spearheaded by CEO David Potts, is by no means complete, after all the weaknesses in online and convenience are still glaringly obvious. Nonetheless, progress thus far has been impressive.”
Morrisons has introduced a healthy eating ‘Eat Smart’ range and said its new Nutmeg clothing womenswear offer was introduced into over 50 stores.
It has also launched a new website, flowerworld.co.uk, offering a range of fresh bouquets for free next day delivery to customers anywhere in Britain.
It said that ‘Morrisons at Amazon’ continues to grow, with the same-day and one-hour delivery service recently extended into more London postcodes.
Phil Dorrell, partner at Retail Remedy, said: “Morrisons can stand tall after this strong trading update for Q1. And given the latest market shares from Kantar, we should expect more to come.
“Performing well in all areas, Morrisons are almost bragging with the list of what they have achieved in this quarter: flowerworld.co.uk, Nutmeg Womenswear, price crunch, Amazon, Best range expansion, Eat Smart, Food to go. The offer is starting to resemble M&S.
“It is evident in store that Morrisons have perceptively upped their game: availability, prices and range and if the customer can feel the difference, sales follow.”