Morrisons: ‘the heat is on’

By Rod Addy

- Last updated on GMT

Related tags Supermarket Asda Tesco

Morrisons saw sales fall again in its third financial quarter
Morrisons saw sales fall again in its third financial quarter
The heat is on for Morrisons in its fourth financial quarter (Q4), according to Shore Capital analyst Darren Shirley as Q3 sales continued to fall.

Shirley described trading for the group in the 13 weeks to November 3 as “disappointing”​, as it continued to lose market share and faced the prospect of inflation further denting sales.

Morrisons operational strategy now seemed increasingly focused on protecting profits, rather than growing them, he said.

And he added the supermarket chain would need to deliver growth in Q4, plus increase sales from increased retail space.

Morrisons pinned its hopes on developing online, convenience and fresh food sales as it announced like-for-like sales in its third financial quarter (Q3) had dropped 2.4%.

200 convenience stores

The grocery multiple confirmed that by 2015 it would open 200 convenience stores and cover more than 50% of UK homes with online food deliveries.

It claimed its “low exposure”​ to these sales channels relative to competitors, which include Tesco and Sainsbury, was hampering performance.

Morrisons opened 36 convenience stores during Q3, bringing the total number of these in its estate to 69, half of which were in London and the south east.

“We are pleased with their performance and remain on track to have 100 M local stores open by the end of the current year,” ​said the retailer. “We confirm today that our target is to open a further 100 M locals in 2014/2015.”

Referring to the progress of its online offering, the company said it had secured a clear online fresh food proposition and finalised a ranging and marketing plan. The IT systems supporting it were nearing completion, as were their integration, it added.

Online food deliveries

Online food deliveries in Warwickshire from a distribution centre in Dordon would begin in January 2014, it said. These would be extended to Yorkshire shortly after that from a delivery spoke in Leeds.

“Many of our customers will be able to experience our distinctive online foodservice offer early in the new year and we expect to be able to serve 50% of UK homes by the end of the year,”​ said ceo Dalton Philips.

“In convenience we are currently opening three M locals a week bringing the Morrisons brand to an ever increasing number of new customers.”

It said it had started the second phase of redeveloping its own-label range, having revamped 11,000 products already.

It had introduced an innovative fresh format into a further 42 stores during Q3 and was on track to convert 100 stores to the format by the end of the year, it stated.

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