In its Christmas trading statement for the six weeks to 30 December, Morrisons has reported a decline in LFL and total ex fuel sales.
Budget consciousness and couponing impact trading
Over the period LFL sales (ex fuel, ex VAT) declined by 2.5% and total sales were down by 0.9% which Morrisons attributes to a very challenging trading environment in which shoppers were highly budget conscious and responsive to the vouchering activity. While Morrisons now has its own coupon at till system, questions may be asked about the effectiveness of its Christmas Saver scheme which required shopper loyalty throughout the Christmas trading period when more instant savings were on offer at rivals.
Focus on promotions and communicating strengths better
The disappointing figures follow lower than anticipated results for Q3 (13 week to 28 October), when LFL sales were down by 2.1%. Following those results Morrisons announced that it would take action to communicate more impactful promotions and communicate its points of difference better, trading priorities it has reiterated again today. These objectives will now be pursued by incoming group trading director Casper Meijer who joins Morrisons in February from Ahold.
Too early for investment in fast growth channels to feed through
Morrisons performance has also been held back by its limited participation in fast growth channels, particularly online and convenience. Here Morrisons is committed to major investments with 20 M Local stores scheduled to have opened by the end of this month and Morrisons new Wine Cellar website providing it with experience and technical knowhow for a wider online rollout. Further detail on these initiatives is expected to be revealed with Morrisons preliminary results in March.
High service standards maintained
While the top line fell short of expectations, Morrisons delivered high levels of availability and and service standards throughout the Christmas period, reflecting its investment in the supply chain and well motivated colleagues.
"A strong business with significant opportunities"
Commenting on Morrisons Christmas trading, CEO Dalton Philips said; "In a difficult market our sales performance was lower than anticipated, but we have a strong business and significant opportunities to advance our strategy, as we accelerate our multi-channel offer".
Full year performance on course to meet expectations
Morrisons added that it expects the sales environment to remain challenging but commented that "through the self help available to us we have managed our business tightly and accordingly the Board believes that our full year performance will be broadly in line with its expectations."
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