8th Jan 2019 10:46
LONDON (Alliance News) - Wm Morrison Supermarkets PLC disappointed the market as its performance for the festive trading period missed analysts' expectations.
The grocer was the worst performer in the FTSE 100 index on Tuesday with shares trading down 2.9% at 213.33 pence each.
For the 9 weeks to January 6, Morrison reported 3.6% growth in group like-for-like sales excluding fuel, with retail sales inching 0.6% higher and wholesale rising 3.0%. Like-for-like sales, including fuel, grew 3.4%.
Total sales in the nine weeks - which includes the key Christmas period - increased by 4.0% excluding fuel and 3.8% including it.
A year ago, in an update covering the 10 weeks to January 7, 2018, Morrison reported 2.8% growth in same store sales, excluding fuel. The retail arm contributed 2.1% to sales in the period, significantly higher that 0.6% recorded this year.
Morrison, the first of the big UK supermarkets to report on its festive performance, retained its full-year expectations.
"Despite this representing a fourth consecutive Christmas of like-for-like sales growth, the market appears unconvinced. This is perhaps down to the supermarket's retail business only providing a small proportion of the growth in the period and because overall, and despite a good contribution from the wholesale arm, sales were modestly behind expectations," Russ Mould, investment director at AJ Bell, commented.
A company-compiled consensus based on 11 analysts forecast Morrison to have seen retail like-for-like sales up 0.5% and group like-for-like sales up 4.1% in the holiday period, meaning that the retailer fell slightly short of analysts' expectations.
Richard Hunter, head of markets at Interactive Investor, said: "Morrison still lags in comparison to its larger rivals in the increasingly important channels of online and convenience stores. In addition, the figures overall are shy both of analyst expectations as well as the same period last year."
Kantar Worldpanel on Tuesday said UK supermarkets achieved record sales growth during the Christmas period, painting a "rosier picture" compared to their high street counterparts.
According to the market research agency, Morrison's market share stood at 10.6%, with Tesco PLC at 27.8%, J Sainsbury PLC at 16.2% and Asda at 15.2%.
Kantar, however, added that two thirds of households shopped at German discounters Aldi and Lidl over the 12-week period to December 30.
The pressure from discounters is proving to be one of the main challenges facing big UK supermarkets, especially as Brexit looms putting even more focus on price competitiveness, AJ Bell's Mould said.
On Monday, Aldi said it experienced its "best-ever Christmas trading" in the UK and achieved almost GBP1.0 billion in sales during December.
According to Kantar, Aldi's market share currently stands at 7.4%, while Lidl's 5.4%.
Interactive Investor's Hunter said: "Morrison has for the most part contributed to a Christmas period in the UK which can be summarised as so far, so good. It hands the baton over to its larger rivals in good shape, although numbers from Tesco and Sainsbury are likely to eclipse this update."
Sainsbury's is slated to update the market on its performance on Wednesday and Tesco is scheduled on Thursday.
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