Supermarket chain Morrisons is “working to improve” as company like-for-like sales (LFLs) excluding fuel increased 0.2% in the nine weeks to 3 January.

In its Christmas trading statement, Morrisons said total sales excluding fuel were down 1.2% (down 1.7% including fuel). Sales contribution from net new space was negative (1.4%), following the recent disposal of 140 local stores and previously announced supermarket closures, but this was not unexpected.

In more positive news, the company added that the LFL number of transactions was up 1.3% year-on-year in its core supermarkets, and online sales grew nearly 100% year-on-year.

Analysts had expected a fall in sales at Morrisons, which has been under pressure from rivals - these latest figures are its first positive numbers in more than a year. They prompted a 10% surge in the company’s share price. 

In reaction to the statement, David Potts, chief executive, said: “We are pleased with our improved trading performance over the Christmas period.

“While there is of course much more to do, we are making important progress in improving all aspects of the shopping trip, and our customers tell us they are pleased with the changes. In addition, we have made further progress in debt reduction, and our financial position is strong and getting stronger.”

The retailer said that price-cutting over the Christmas period drove deflation of 3.2% (excluding fuel) and c.7% on a two-year basis. There were strong LFLs in premium products and sales of beers, wines and spirits improved following a category reset.

Potts was also quick to praise staff for “helping their communities, especially in the north of Britain where the flooding has been so severe”.

The future

Looking forward, the retailer said: “Our focus on simplifying and speeding up the business continues. Around 800 head office roles have been removed since the start of 2015/16. We are also bringing some teams, such as maintenance, in-house to enable us to serve stores and customers better.

“Our financial position remains strong and strengthened further during the period, as we performed well in all areas of debt reduction.” Its initial guidance for 2015/16 year-end net debt was £1.9bn-£2.1bn which it reduced to under £1.9bn in November 2015. Its 2015/16 year-end net debt guidance is now being lowered to £1.65bn-£1.8bn. 

Online sales contributed 0.9% LFL for the nine weeks to 3 January.

The new executive committee is now complete, with the appointment of Andy Atkinson as group marketing and customer director. Atkinson has held various senior commercial roles at Morrisons over the last four years. 

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