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 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).