Morrisons’ sales recovery piles more pressure on the discounters

Morrisons’s half-year profits increased for the first time in four years but its CEO says recovery is “still in the foothills”.

Morrisons saw profits rise by 13.5% to £143m for the six months to 31 July, marking its first increase in half-year profits for four years.

Like-for-like sales, meanwhile, were up by 2% in the May to July quarter, representing the big four supermarket brands’ third straight quarter of growth.

Earlier this year, Morrisons’ CEO David Potts said marketing had played a “strong role” in the retailer’s ongoing turnaround, with ads from new agency Publicis focusing on price cuts, family tradition and the role of in-store food-making. And today (15 September), Potts said he is “pleased with the progress” Morrisons is making.

Read more: Morrisons boss: ‘Our marketing is helping boost sales and brand loyalty’

He says: “We are still in the foothills of our recovery programme. We have returned the business to core customers and sped up the business. We are pleased with progress so far and there is a lot more we can do and will do for customers and colleagues, but so far so good.”

Is this bad news for the discounters?

Morrisons’ strong sales performance comes after it cut prices twice in recent month, as it aims to win back customers lost to the cheaper discounters.

Earlier this month, Morrisons cut the prices of 160 everyday products by an average of 12%. And in August, it cut the prices of 1,000 products, including fresh produce staples, by 18%.

Although Asda continues to struggle and sales at Sainsbury’s remain relatively flat, the positive growth at Morrisons is mirrored by big four rival Tesco, which has now clocked up two successive quarters of like-for-like sales growth.

However, despite this compelling evidence of a turnaround for two of the big four grocers and many analysts claiming sales at Aldi and Lidl are slowing, the discounters remain defiant.

Earlier this month, Aldi’s marketing director Adam Zavalis told Marketing Week: “Things are not slowing down, it’s an exaggeration. In value terms we are growing faster than we did in 2011 and we are not seeing customers return to the big four either, it is quite the opposite. We have attracted 652,000 more customers over the past 12 weeks; Aldi is still going from strength to strength.”

Latest from Marketing Week

5 killer stats to start your week

marketing stats

1. Digital ad viewability hits 18-month high The viewability of banner ads rose from 51% in Q2 to 52% in Q3 – the first time it has risen for two consecutive quarters. (stats if want to use them to show the increases: 47% in Q1, 51% in Q2, 52% in Q3) That is the highest […]

PLEASE SIGN IN OR REGISTER. IT'S FREE, QUICK AND EASY!

Access Marketing Week’s wealth of insight, analysis and inspiration that will help you develop as a marketer and leader.

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

We’ll ask you just a few questions about what you do and where you work, so we can make Marketing Week more relevant to you.

Register now

THE BEST CONTENT

Our award winning editorial team and columnists will ask the biggest 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 will be 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.

Dedicated to developing your skills and helping you achieve marketing excellence. Find guidance on leadership, professional development and the latest industry jobs.

Having problems?

Contact us on +44 (0)20 7292 3711 or email subscriptions@marketingweek.com

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