Morrisons‘ Chief Executive Dalton Philips will leave the UK‘s fourth largest supermarket after five years heading the frontline.
Speaking of Philips‘ departure was Andrew Higginson, incoming chairman who will take up his position on January 22, earlier than originally planned; Higginson said:
“We need to return the business to growth. The board believes this is best done under new leadership.”
The announcement comes as Morrisons reported on Christmas trading, which saw like-for-like sales excluding fuel in the six weeks to January 4 fall 3.1%, making it the worst performer of the major supermarket groups.
Total sales slipped 1.3% and the grocer also said it will close 10 loss making stores this year.
Morrisons cited sales trends as improving over the Christmas period, benefiting from better pricing and execution.
Items per basket were down 0.2% over the Christmas six weeks, although slightly better than 2.4% year-on-year decline in the Q3 of the financial year. The number of transactions improved from a 3.3% fall to a 1.7% decline.
Morrisons attributed Black Friday as impacting on the start of the reporting period, but it was “encouraged that like-for-like and volume performance was stronger in the last four weeks, the key trading weeks for food”.
Phil Dorrell, director of retail consultants, Retail Remedy, comments:
“If other members of the Big Four supermarkets are the squeezed middle, Morrisons is being steamrollered flat. The departure of its chief executive was grimly inevitable.
With the most dated stores and weakest business strategy of the old guard grocers, Morrisons has haemorrhaged both sales and share to the brash young discounters who took its cheap prices USP, improved it, and then unceremoniously yanked the rug from underneath it.
Despite a big improvement on a disastrous Q3, like-for-like sales at Morrisons continued to plummet over Christmas.
The biggest surprise in these grim results is the decision to close just 10 stores. The brand‘s property portfolio is one of few ‘get out of jail‘ cards – and it is busy playing it by unloading up to £500m of property assets this year.”
Other props for the stumbling business are few and far between. While Morrisons finally completed a million internet orders, troubled grocer is, as Dorrell put it “so late to the online party that its rivals have already polished off the cheese course, leaving it hovering awkwardly by the door.” Declaring its on-time delivery statistics as a victory has been a distraction in a business which should be prioritising volume.
“Despite its multiple problems,” Dorrell adds, “Morrisons remains a solid business – or at least it would be if it could get its offer right. It just needs some real muscle to convince people it is attractive again. The marketing over the last few years has been dire, and has done nothing to change its tired public image. The brand needs to be much bolder if it is to recapture the distinctive market niche that it created and then lost.”
