Morrisons has issued a grim financial update after confirming the closure of approximately 100 stores last month. The supermarket group reported a slowdown in sales growth for the latest quarter, as it faces highly competitive market conditions.
Sales Performance
Total sales grew by 1.7% to £4 billion over the 13 weeks to April 26, down from a 2.6% increase in the previous quarter. Like-for-like sales growth also slowed to 2.2% from 2.8% in the previous quarter. Despite this, boss Rami Baitieh said he was pleased by the latest performance and highlighted an encouraging start to the third quarter, with hopes that sales will be boosted by the World Cup and Father's Day.
Market Position
The discount rival Lidl recently overtook Morrisons to become the UK's fifth largest grocery chain, pushing Morrisons into sixth place. Morrisons stressed that it made good progress in its growth strategy over this time, with a continued focus on value to attract shoppers.
Cost Reduction and Store Closures
Cost reduction efforts saw the company unveil plans to shut about 100 loss-making convenience stores last month, as it highlighted that cost pressures were worsened by government policy. In a fresh update, the retailer said it still opened 30 new Morrisons Daily franchise stores in the quarter and plans to open hundreds more in the years ahead.
Financial Highlights
On Wednesday, Morrisons reported that underlying earnings rose by 5.7% to £323 million for the first half of its latest financial year. The company also secured a further £48 million worth of cost savings over the latest quarter, moving closer to meeting its £1 billion savings target as part of its long-term strategy.
Mr Baitieh said: "In a highly competitive market, we're focusing hard on delivering the best value for customers to give them more reasons to shop at Morrisons. While more recent international news creates some grounds for optimism, we continue to monitor the impact of input inflation very closely and we remain committed to doing whatever we can to help keep prices down for customers."
