This comes after like-for-like sales over the festive period, excluding fuel, were down 3.1%, it said in a separate trading announcement.
Despite the sales drop, in the six weeks to 4 January the retailer said its convenience stores had served a total of five million customers.
It also said the number of items on promotion for the six weeks was down by -9.6% year-on-year.
Referring to his departure, Philips, chief executive of the business, said: "Morrisons is a great company with exceptionally talented people and I have been very proud to have worked with them.
“Over the past five years, we have made many improvements to the business and have given Morrisons strong foundations for the future. I wish every success to the company and all of my colleagues, who have, and continue to work so hard.”
Andrew Higginson, now deputy chairman of the board, said: “In the next chapter of Morrisons’ development, we need to return the business to growth. The board believes this is best done under new leadership. I would like to thank Dalton for his contribution as CEO. He has brought great personal qualities and values to his leadership of the business, having had to manage against a background of considerable industry turmoil and change.”
The board pointed out Philips deserved credit for the way he had dealt with pricing issues, and had led the company into convenience and online channels.
This was the first Christmas for Morrisons’ Match & More service, which the company said had received “excellent” feedback.
In the entire fourth quarter, the supermarket opened 17 Morrisons local convenience stores, bringing the total to 46 new stores for the year to date.
Commenting on the results, Philips said: “Our like-for-like sales were a step-up on recent quarters and trends in the key operational measures continued to improve. Our three-year cost saving and cash flow targets remain on track. Although there is still much to do, we are building the platform to enable us to compete better in an industry that we expect to be highly competitive in the year ahead.”
For the year 2014/15, the company said it expects property disposal proceeds of £400m-£500m and year-end net debt of £2.3bn-£2.4bn, which is in line with guidance.
Professor of Practice, Christopher Beer, of Warwick Business School mentors and trains chief executives.
He said:"No doubt the new CEO at Morrisons will need to show the kind of decisiveness shown by new Tesco boss Dave Lewis, potentially cutting capacity and jobs. A clear statement of intent is needed. There’s no question that whoever comes in will have a tough job to do.
"To be fair some good things have been done, but it is arguable that they have been too little and too late. Improving the online offering and developing a more coherent convenience strategy were critical but Morrisons is in catch-up mode. Even the the bold decision to declare that profits would be sacrificed to sustain competitiveness looked like a panic move.
"The over-riding challenge though is to find a space in the market that resonates with consumers - in short, why Morrisons? Historically, the main reason for shopping at Morrisons was that they were low-price. Having lost that mantle to Aldi and Lidl it is unclear why you would go to Morrisons. Clear differentiation communicated in a compelling way - that’s essential and not easy.
"The new CEO will have many people telling him what’s wrong and what’s needed but ultimately he will have to find his own way."