Morrisons posts sales growth despite ingredient price rises

Morrisons’ like-for-like (LFL) sales, excluding fuel, were up 2.8% in the 10 weeks to January 7 this year. This was comprised of contributions from retail (2.1%) and wholesale (0.7%). Total sales were up 2.6%.

The vertically integrated retailer saw particularly strong sales growth in the six weeks to January 7, with LFL sales up 3.7%.

Morrisons’ LFL sales were up 2.3% year-on-year, with sales of the supermarket’s ‘Best’ premium range driving volumes – up 25%. Online sales grew by 10%.

Chief executive David Potts said: “More and more customers found more things they wanted to buy at competitive prices at Morrisons this Christmas. ​

‘Positive like-for-like sales’​

“Our plans to become a broader and stronger business are progressing well, with another period of positive like-for-like sales and the start of the rolling programme to supply McColl’s ​[the convenience store chain].”​

The supermarket’s sales success came in spite of rising ingredients costs affecting the company.

In a statement, Morrisons said: “We also continued to become more competitive and, despite input cost pressures on many commodities, the price of a basket of key Christmas items was the same as last year. LFL volume was positive.”​

Commenting on Morrisons’ results, market analyst Money.co.uk’s Martin Lane said the supermarket had performed better than expected, despite fierce competition from discount retailers Aldi and Lidl.

“Morrisons claim that despite rising costs they kept the cost of Christmas items the same as last year, which may have been one of the reasons penny-pinching consumers chose to spend more with the supermarket,”​ said Lane.

‘Despite rising costs’​

“Morrisons’ partnership with Ocado and Amazon providing delivery slots which rival the largest supermarkets has been a great move for them. Busy consumers want the convenience of having their shopping delivered to their door without the hefty price tag.”​

Morrisons’ results came as the UK spent £10.5bn on groceries during December, according to a report from market research company Nielsen.

Mike Watkins, Nielsen’s UK head of consumer insight, said: “The supermarkets did well this Christmas, particularly amid fierce price competition and shoppers starting to feel the squeeze on disposable incomes. It was in stark contrast to many high street retailers who saw less footfall and sales declines.”​

Meanwhile, Real Good Food is seeking new funding to supplement recently-agreed short-term financing, after revealing a pre-tax loss of £6.7M in interim results​ for the six months to September 30 2017.