LFL sales, excluding fuel, rose by 0.7% and by 1.2% including fuel during the quarter.
Total sales, excluding fuel, fell by 1.8%, which reflected the impact of supermarket closures and the exit of the retailer’s M Local chain.
LFL transactions were up 3.1% in the quarter, with strong LFL volume growth. The rise in transactions was driven by a significant increase in sales of Food to Go – which climbed more than 17% year-on-year – after the launch of new products.
Morrisons claimed it was continuing to “simplify and speed up the business”, with its improvements proving popular with customers. New self-scan and express checkouts were said to help customers shop more often and queue less.
‘Unique food maker and shopkeeper strengths’
The retailer’s food manufacturing capability remained a key unique point of difference compared with other supermarkets, according to the results statement. “The 'Morrisons Makes It' programme highlighting our unique food maker and shopkeeper strengths was launched in the quarter, and is a key element of communicating what makes Morrisons different.”
Morrisons is the UK’s second largest manufacturer of fresh food.
Chief executive David Potts said: “We are encouraged by progress across our six priorities. There is still much to do and our colleagues are working very hard to improve the shopping trip and save customers every penny we can.
‘Unique food maker’
“The 'Morrisons Makes It' programme, highlighting our unique food maker and shopkeeper strengths, was launched in the quarter, and is a key element of communicating what makes Morrisons different.”
“Customers are responding and satisfaction levels remain ahead of last year. We are of course pleased with a second consecutive quarter of positive LFL sales, which demonstrates our aim to stabilise trade is taking effect.”
The business remained committed to a net debt target of £1.4bn to £1.5bn by the year of the end.
Further round of price cuts
Earlier this week, the Bradford-based retailer revealed a further round of 847 price cuts, covering everyday basic items.
For example, Morrisons chicken thighs, 750g, fell in price from £2.25 to £1.94 and Warburtons free-from white sandwich thins, reduced from £2.20 to £1.80.
Meanwhile, the retailer’s results statement published this morning (May 5) pledged to continue to “invest in improving the shopping trip for customers”.
The retailer predicted continued deflation and sustained improvement in customer satisfaction.
“Growing LFL volume remains a key priority for every member of the Morrisons team,” said the firm.
City analyst Shore Capital said Morrisons was “on the right road”. Read more analysis in the box below.
What the analysts say
“Morrisons’ ceo has spoken of the business travelling on a long journey of self-improvement, and this remains the case with much more to do for the business to deliver upon its potential from working or trading its assets harder, be they in-store or across its food processing infrastructure.
“However, we do not underestimate the enormous achievements to date by the new management team either, the assembly of which was only completed in December 2015.”
- Clive Black and Darren Shirley, Shore Capital