Morrisons’ share price takes a hit as sales drop

Morrrisons saw like-for-like sales tumble 7.1% in the 13 weeks to 4 May – a bigger fall than many analysts were expecting.

The retailer, which announced a new three-year strategy in March to fend off competition from the discounters, saw total sales fall 5.6% in the first quarter. The company’s share price fell 1.5% on the back of the news.

Morrisons introduced price cuts on 1,200 products last week as part of its new strategy, but chief executive Dalton Philips said these would take time to have an effect.

“The reaction of our customers to the 1,200 ‘I’m Cheaper’ price cuts we announced last week has been very positive.” he said. “Although it will take time for their full impact to be felt, we are confident that these meaningful and permanent reductions in our prices will enable our clear points of difference to resonate strongly with consumers.”

The company said it was making good progress on its strategic initiatives, with investment in its IT infrastructure and systems on track, which would help the business make savings of £1bn over the next three years.

During the quarter Morrisons opened two core stores and 11 M local convenience stores. It said it was on schedule to meet its target of having up to 200 convenience stores open by the end of the year.

Also by the end of this year, the retailer claimed its online business would reach up to 50% of UK households, accounting for more than £500m a year in sales, when combined with its convenience stores.

In a statement, the retailer said: “While the trading environment remains challenging, our financial outlook for the full year of underlying profit before tax in the range of £325m-£375m, remains unchanged.” 

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