The supermarket’s positive news is slightly overshadowed by yesterday’s strong results from Aldi.
Morrison’s reports sales growth in crucial Christmas period
- 3.6% growth in like for like sales.
- Customer satisfaction highlighted as being a key factor in generating growth.
- We recommend the supermarket as a medium-risk ‘hold’.
In the hotly anticipated Christmas trading update, supermarket chain Morrisons reported a 3.6% growth in like for like sales, with its retail (store) side of the business up 0.6%. This is its fourth consecutive like for like sales growth for the festive period and was slightly ahead of expectations for its retail side.
David Potts, CEO, has highlighted an improvement in customer satisfaction in areas such as the checkout as being key factor in generating this growth during a competitive retail period.
The market reaction to the statement, which includes an unchanged outlook for the year, could have been worse though the shares remain down by around 3% in early morning trading.
The news today remains overshadowed by the strong numbers from Aldi yesterday to which Morrisons has responded to with a slash in prices as the German discounter reported a record Christmas - a reminder, if one was needed, of the competitive nature of the business they are involved in.
With big names lined up to report their figures for the Christmas period, the market focus is likely to quickly move onto Tesco and Marks & Spencer with their update due out later in the week.
Despite a sales rise over Christmas, the group warned of a ‘change in consumer behaviour’, competition concerns are not going to go away and the management initiatives will take time to execute. So for the time being we would suggest a ‘hold’ recommendation. Long suffering investors should however watch the situation closely, as the retail environment remains crowded.
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