Supermarket chain Morrisons faced a “challenging” Christmas with sales down by 0.9 per cent, the grocer has revealed in a trading update released today.
Total sales excluding fuel declined by 0.9 per cent in the six weeks to December 30th 2012 while like-for-like (LFL) sales were down by 2.5 per cent, in line with analysts predictions.
The grocer described the Christmas period as “challenging, with hard pressed consumers increasingly shopping to a budget and vouchering a prominent feature of a highly promotional market.”
But CEO Dalton Philips said that Morrisons‘ sales had still been “lower than anticipated” despite the difficult trading environment, and the company has highlighted areas which it needs to improve upon in 2013.
He 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 multichannel offer.”
Using other channels, such as online and convenience, has boosted the supermarket‘s position and analysts have argued that this attracted increasing numbers of customers during the Christmas period.
However, more needs to be done to entice shoppers in an increasingly competitive market and commenting on this need for improvement, Joseph Robinson, Lead Consultant at analyst firm Conlumino, said: “The grocer has been excruciatingly slow to respond to emerging consumer shopping trends in food and grocery.
“Convenience and online – while representing less profitable channels in the short term – are where the current growth spots predominately are in the market.
“The grocer is finally making some strides in these areas, with plans to open more convenience stores and a rising likelihood that it will finally launch a full-scale online offer in 2013.
“However, these developments have been slow, and Morrisons is playing catch up to rivals which are significantly more established in these areas.”
Morrisons is also keen to emphasise its points of difference from other supermarket chains, which it plans to do by way of an advertising campaign featuring TV presenters Ant and Dec.
Set to begin in February, the TV advertisements will promote the supermarket‘s in-store butchers and bakers, while Morrisons will also sponsor ITV shows such as Saturday Night Takeaway.
The retailer said that its financial position remains strong and that full-year results should not be adversely affected by the disappointing Christmas trading.
Commenting that Morrisons poor results came as “little surprise”, Jon Copestake, Retail Analyst at the Economist Intelligence Unit, said: “Christmas trading is especially telling for retailers because it is usually a time for consumers to ‘trade up‘ to more premium sellers, as evident by the strong results posted by Waitrose over the festive period.”