Morrisons warns on profits as Christmas sales slump

Morrisons blamed its lack of online offering, heavy discounting by rivals and a “challenging” Christmas for a sharp drop in sales over the festive period.

morrisons-christmas-460
Morrisons sales drop 5.6 per cent despite its multi-million pound Christmas ad campaign starring Ant and Dec

The supermarket had hoped that a multi-million pound Christmas ad campaign starring Ant and Dec and focusing on its fresh food and low prices would win over shoppers.

However, in an unscheduled trading update, the grocer said like-for-like sales for the 6 weeks to 5 January were down by 5.6 per cent, excluding fuel. It also issued a warning on profits, saying that its full year results will be below market expectations.

Morrisons CEO Dalton Phillips says: “In a very tough market our sales performance over Christmas was disappointing.”

The performance by Morrisons is the worst of the grocers so far. Rival Sainsbury’s yesterday (8 January) reported a slowdown in sales growth to 0.2 per cent, while Tesco saw its sales fall 2.4 per cent over Christmas.

The winners over Christmas are expected to be the discounters and premium grocers. Waitrose posted a 4.1 per cent increase, while M&S food was up 1.6 per cent. Analysts expect Aldi and Lidl to post double-digit sales growth.

Sainsbury’s CEO Justin King admitted that Christmas 2013 has been his toughest yet amid rising competition and unprecedented vouchering. Morrisons also said it suffered as “hard-pressed consumers” economised and managed their budgets tightly, buying less and shopping across a range of formats and retailers in order to get the best deals.

Morrisons has been especially hard hit by its lack of convenience and online offering, both of which are growing faster than the overall market. It has just 85 convenience stores, compared to the 1,500 owned by Tesco, and its online service is only set to start making its first deliveries tomorrow (10 January).

Latest from Marketing Week

NOT REGISTERED? IT'S FREE, QUICK AND EASY!

Access Marketing Week’s wealth of insight, analysis and opinion that will help you do your job better.

Register and receive the best content from the only UK title 100% dedicated to serving marketers' needs.

We’ll ask you just a few questions about what you do and where you work. The more we know about our visitors, the better and more relevant content we can provide for them. And, yes, knowing our audience better helps us find commercial partners too. Don't worry, we won't share your information with other parties, unless you give us permission to do so.

Register now

THE BEST CONTENT

Our award winning editorial team (PPA Digital Brand of the Year) ask the big questions about the biggest issues on everything from strategy through to execution to help you navigate the fast moving modern marketing landscape.

THE BIGGEST ISSUES

From the opportunities and challenges of emerging technology to the need for greater effectiveness, from the challenge of measurement to building a marketing team fit for the future, we are your guide.

PERSONAL AND PROFESSIONAL DEVELOPMENT

Information, inspiration and advice from the marketing world and beyond that will help you develop as a marketer and as a leader.

Having problems?

Contact us on +44 (0)20 7292 3703 or email customerservices@marketingweek.com

If you are looking for our Jobs site, please click here