Morrisons ‘under-performs but is on improving trend’
Shore Capital analysts Clive Black and Darren Shirley said: “Morrisons continued to under-perform its peers in the first 13-weeks … However, looking at the Nielsen data for the four weeks to April 27, the relative trading momentum improved to the point that the number four player in the British supermarket scene actually out-performed its big four rivals, albeit comparative assisted.”
Morrisons reported total sales excluding fuel were up by 0.6% but down by 0.3% including fuel.
‘Steady improvement’
Like-for-like sales were down 1.8% and down by 2.6% including fuel. The retailer said: “This performance (excluding fuel) reflects a steady improvement from the previous quarter and is in line with our expectations.”
Black and Shirley continued to worry about Morrisons’ negative operational gearing on its vertically integrated business model.
But they retained their current pre-tax profit forecast for 2013/2014 of £809M and retained Shore Capital’s ‘sell’ advice on the retailer’s stock.
The retailer is due to publish its interim results on September 12.
Morrisons’ boss Dalton Philips claimed the retailer had made a solid start to the year, with its sales performance improving since the last quarter.
“Our promotions have been more innovative and we are explaining Morrisons’ points of difference more effectively,” he said.
“These efforts were further reinforced by the horsemeat scandal which helped drive increasing customer recognition of Morrisons’ unique supply chain and approach to meat sourcing. They now understand that Morrisons is best placed to sell food that is what it says it is.”
Philips said Morrisons’ ambition to build a multi-format, multi-channel was “right on track”.
