Morrisons online debut set for 2014 as sales take a dip

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Morrisons has announced that it will launch an online grocery operation by January 2014 and is looking to enlist Ocado to help it do so.

The Bradford-based retailer said this morning that it was in talks with online grocer Ocado that “may lead to an agreement to license certain of Ocado’s intellectual property and operating knowledge for the purpose of Morrisons commencing an online grocery business in the UK”.

However Morrisons refused to give any details of what model it would be using for its online debut and said it was not dependent on the outcome of the Ocado talks as “there is no certainty that an agreement will be reached”.

CEO Dalton Philips denied the talks with Ocado indicated that it had not learnt enough about launching a profitable online grocery business from its tie-up with US-based online retailer FreshDirect. Morrisons paid £32m for a 10% stake in the New York grocer two years ago and has had a team embedded there for the last 18 months.

“The sustained pressure on consumer spending was reflected in our like-for-like sales performance, which was not as good as it should have been” - Dalton Philips, Morrisons

The announcement came as Morrisons reported a 2.1% fall in like-for-like sales for the year to 3 February. Pre-tax profits fell 7.2% to £879m.

Morrisons said stores converted to its new Fresh Format were continuing to perform to plan. It has converted more than 100 so far and will transform a further 100 this year. It has also revised upwards the number of convenience stores it plans to open by the end of the year from 70 to 100.

“The sustained pressure on consumer spending was reflected in our like-for-like sales performance, which was not as good as it should have been,” said Philips. “We have implemented a range of measures to address this and are making good progress in improving our promotional effectiveness and in communicating our points of difference.”

He also said trading this year would remain tough with Morrisons expecting to see a 1% fall in like-for-like sales.

ANALYSIS: The 10 questions Morrisons CEO Dalton Philips needs to answer

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