Sales rise again as recovery goes on at Morrisons

MORRISONS is set to announce rising sales when it unveils its results this week, even as higher inflation is casting a shadow over leading supermarkets’ prospects.

The company, which has a tie-up with the Ocado home delivery service, is expected to say that its turnaround under two former Tesco executives is continuing, with same-store sales expected to have risen by as much as 2 per cent in the past three months.

City analysts regard this as a strong performance from an established supermarket chain as it fends off larger rivals – a rejuvenated Tesco, Sainsbury’s and Asda.

The Bradford-based company is run by chief executive Dave Potts and chairman Andy Higginson. Both left Tesco in 2011 shortly after the appointment of then chief executive Philip Clarke. Finance director Trevor Strain was formerly at Tesco, where he was UK property finance director. The sales rise will mean the company has increased sales for six consecutive quarters in a difficult market. Morrisons appears to be shrugging off the revival of Tesco under Clarke’s replacement, Dave Lewis, and the continued rapid rise of discounters Aldi and Lidl.

‘The market is tough, the discounters are not going away and the gradually decelerating consumer economy in the UK may give them more succour if value-based superstores like Morrisons take their eyes of the ball,’ said Clive Black at Shore Capital, which is house broker to Morrisons.

But he said: ‘Morrisons is in much better shape than it has been for some considerable time. We believe that David Potts and his team deserve praise for the stabilisation of the business and what we believe is a period of growth on growth.’ However, he said there was ‘a lot of fixing’ still to do, such as redecorating stores and driving online sales.

Supermarket sales may receive a lift in the coming months as rising costs force up prices following a drop in sterling over the past 10 months.

But that could also cause problems. Earlier this month a slowdown in volume growth at Tesco led to concerns that rising food inflation could lead some customers at the fringes to cut back or turn to Aldi and Lidl. In February, Aldi overtook the Co-op to become Britain’s fifth-largest grocer. Morrisons is the fourth-largest.

Aldi is expected to top £9billion sales this year. That would still leave it some way off Morrisons’ £16billion, but it is growing much faster. Aldi boss Matthew Barnes told The Mail on Sunday last month that the firm is cheaper than all of its bigger rivals and that he expects the price gap to increase this year.