Seasonal events boost Morrisons’ first-quarter sales

St Valentine’s Day, Mother’s Day and Easter falling in quick succession has helped Morrisons to a strong first quarter. 

In its Q1 trading statement for the 13 weeks to 30 April 2017, the retailer saw group like-for-like sales (excluding fuel) rise by 3.4%. Total sales (excluding fuel) were up 2.8%, although this was affected by store closures over the past 12 months.

The growth in like-for-like sales was particularly welcomed, with some price inflation occurring during the quarter due to imported foods being hit by a lower rate of sterling. However, the retailer recorded a rise in customer numbers, attributed to its competitive pricing and its ‘Price Crunch’ campaign, which makes a return this week.

David Potts, chief executive, said: “Our new financial year has started well, thanks once again to the dedication of our team of food-makers and shopkeepers. We are improving the shopping trip in many different ways, which is making Morrisons more popular and accessible for customers. These new initiatives in-store, online, in wholesale and services are beginning to build a broader, stronger Morrisons.

“We are confident we will continue to turn around and grow Morrisons. Our expectations and guidance for 2017/18 are unchanged, including year-end net debt of less than £1bn.”

Clive Black, of analyst Shore Capital, said the trading update brought “further welcome and reassuringly good news from the company”, with its sixth quarter of positive like-for-like sales.

“We are naturally encouraged by recent trading momentum that has been delivered by Morrisons, noting that the market was reasonably quiet in the first calendar quarter of 2017, a tide of activity reflected in the narrative of Tesco CEO Dave Lewis at his FY2017 preliminary results on 12 April 2017.

“April, according to Kantar and Nielsen data, seems to have been much more robust – the strongest 12-week data for over three years in fact – which may augur well for the start of Morrisons’ Q2 performance.”

Jon Copestake, chief retail and consumer goods analyst at The Economist Intelligence Unit added:

“The sustained recovery of Morrisons fortunes under Dave Potts seems to be continuing and comes in contrast to the performance of other "big four" retailers with some very impressive like for like growth figures. Interestingly, in times of consumer uncertainty, rising prices and belt tightening among shoppers, Morrisons has benefited from expanding its premium and healthier eating private label ranges.

"The tie-in with Amazon has also ramped up its web offering which will no doubt increase Morrisons prominence as online grocery sales continue to grow quickly. However, it is also worth noting that store closures have weighed slightly on total sales growth and Mr Potts "back to basics" strategy will certainly continue to involve a streamlining of Morrisons physical presence.”

Another growth driver was the number of transactions taking place during the quarter, which grew 4.6% year-on-year, as opposed to the number of items per basket dropping 6.9% over the same period, which, according to Shore Capital, reflected the ongoing trend of rising food-to-go shopping, fewer coupons being used and more single item non-food purchases taking place.

Other operational highlights included the introduction of a new online and in-store ‘Food to Order’ offer for spring/summer, allowing customers to pre-order for parties or other special events all year round.

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