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Morrisons (MRW) has upgraded full-year profit expectations after recording its strongest performance for seven years, with like-for-like sales in the nine weeks to 1 January up 2.9% (4.7% including fuel).

Total sales also increased 2% (4% including fuel) and like-for-like transactions grew 5.2% – although items per basket were down 5.3% for the period.

Morrisons said in the Christmas trading update that the growth was achieved by improving the offer, becoming more competitive and serving customers better.

Fresh categories such as fruit & veg, together with beers, wines & spirits, ‘best’ and Nutmeg clothing all performed well, the retailer added.

Morrisons.com also achieved its biggest ever week for sales, contributing 0.6% to like-for-like sales growth for the nine weeks.

Underlying pre-tax profits for 2016/17 are now expected to be ahead of consensus (£326m), in the range £330m to £340m.

CEO David Potts said: “This Christmas we made further improvements to the customer shopping trip. We stocked more of what our customers wanted to buy, more tills were open more often, and product availability improved as over half of sales went through our new ordering system. Both like-for-like and total sales grew, which was very encouraging.

“18 months ago I said that this would be a colleague-led turnaround, and our improving performance is entirely due to the continuing hard work of the Morrisons team of food makers and shopkeepers. I would like to thank all colleagues for making Christmas and New Year extra special for our customers.”

Morrisons added that the new ‘Best’ range was already proving very popular, with over half of customer baskets including at least one ‘Best’ item. The retailer launched over 100 new ‘Best’ products for Christmas, in addition to the first 470 launched in autumn.

Morrisons shares are up 3.3% so far this morning to 245.3p.

Morning update

As Morrisons updates the City on its festive trading, Nielsen this morning revealed that the supermarkets had their best Christmas in four years as shoppers left it late to pick up groceries, spending £5.9bn in the two weeks up to Christmas Eve.

The consumer insight firm declared Aldi the winner of Christmas, but Morrisons was the strongest of the big four grocers.

Nielsen retail performance data released today showed takings at the tills for the four-week period ending 31 December rose 3.3% versus the same period a year ago. This was the highest growth since 2012 (+3.7%) and a big improvement on last Christmas when year-on-year growth was flat.

Shoppers delayed grocery purchasing to such a degree that it caused a huge surge in sales in the week ending Christmas Eve, with sales rising 22% compared with the same week last year

“Shoppers left it particularly late this year, not only because there was an extra day to do the big Christmas shop but the mild weather meant there was no need to visit the shops to stock up in advance, which benefited larger stores in particular,” said Mike Watkins, Nielsen’s UK head of retailer and business insight.

Watkins also attributed the strong performance to supermarkets simplifying their promotional strategies. The percentage of purchases that went on sales/promotional products dropped from 31% last Christmas to 27% this year – the lowest for six years.

“Stronger communication on price cuts and less complicated promotions helped capture the seasonal and discretionary spend which had been ‘missing in action’ for much of 2016,” Watkins added.

Alongside the rise in sales value, the volume of groceries purchased increased 2.1%.

All categories returned to positive sales growth, except for household and fresh meat/ fish/poultry where deflation continued to impact sales.

Confectionery (+9.5%), beers, wines and spirits (+5.7%), deli/cheese/meats (+5.6%) and soft drinks (+4.3%) saw the strongest growth. General merchandise (+2.5%) also bounced back after a Black Friday dip.

Aldi had the biggest year-on-year growth among the grocery retailers with sales up 15% in the four-week period and almost one million new shoppers compared with last year. “New ranges and more fresh foods meant shoppers were able to do a full Christmas shop this year at Aldi,” Watkins said.

Among the big four, Morrisons had the largest year-on-year growth (3.4%) in sales, narrowly ahead of Tesco (2.7%). However, across the full 12-week period, Tesco came out ahead and was the only one of the top four supermarkets not to see a drop in market share.

Over the 12 weeks, Iceland (4.7%) was the third fastest-growing retailer after Aldi and Lidl.

Kantar Worldpanel also showed a record Christmas for the supermarkets, with the 12 weeks to 1 January showing the fastest recorded growth since June 2014. The research firm said an additional consumer spend of almost £500m year on year increased total supermarket sales by 1.8% in the period. Kantar also declared that after 28 months of deflation in the market, like-for-like grocery prices have increased by 0.2 percentage points to bring a return to inflation.

Kantar data also showed Tesco as the Christmas winner over a 12-week period, with sales up 1.3% thanks to a strong performance in fresh food. However, this wasn’t enough to stop its market share from falling back by 0.1 percentage points to 28.2%. Morrisons, whose overall sales were held back in 2016 by the impact of a number of store closures, marked a strong start to the year with growth of 1.2% – its first period of growth since June 2015. Sainsbury’s saw a marginal sales decline of 0.1%, while Asda was down by 2.4%, an improvement on the 4.7% decline reported in December.

Sales growth for both Aldi and Lidl accelerated compared to pre-Christmas levels as shoppers continued to warm to their premium lines, Kantar said. Year-on-year, Aldi grew sales by 11.8% and market share to 6%, while Lidl’s sales growth of 7.5% increased its share by 0.2 percentage points to 4.4%. Also increasing sales after a successful end to 2016 were Iceland, where sales grew by 9.6%, Waitrose (3%) and Co-op (2.4%).

Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, said: “Year-on-year market growth has been helped by comparisons to a weaker Christmas in 2015, but sales were also buoyed by strong consumer appetite for festive celebration after a turbulent year.

“With Christmas Eve falling on a Saturday and giving shoppers more time to buy their final festive trimmings, the single busiest shopping day of the year was Friday 23 December with over half the population braving a grocery store. The typical household spend for December reached £365 this year – £52 more than the average month.”

He added: “The long-anticipated return to inflation suggests that the speed of growth in the overall market will continue to hasten in 2017, and both consumers and retailers will be looking at ways to avoid increasing the cost of the weekly shop. Last year retailers focused on simplifying their discounts and offers, and the level of promotional sales has fallen to 37% as a result – the lowest level over Christmas since 2009.”

Elsewhere, the latest BRC – KPMG retail sales monitor for December a strong finish to a rollercoaster year. UK retail sales increased by 1% on a like-for-like basis from December 2015, when they had increased 0.1% from the preceding year. On a total basis, sales rose 1.7%, against a 1% increase in December 2015. This is in line with the three-month average of 1.8% but faster than the 12-month average of 1.2%.

Over the three-months to December, food sales increased 1.1% on a like-for-like basis and 2.4% on a total basis, clearly ahead of the 12-month total average growth of 1%. This is the highest three-month average total growth since September 2013.

Over the three-months to December, non-food retail sales in the UK rose 1.1% on a like-for-like basis and 1.3% on a total basis. And over the three-months to December, online sales grew 7.2% while in-store sales declined 1.2% on a total basis and 1.4% on a like-for-like basis

British Retail Consortium CEO Helen Dickinson said: “It was a polarised month as shoppers held out for the Christmas week, which saw sales up around 40% compared with the other weeks of the month. Food sales were the major contributor to total growth, while non-food sales on the other hand were sluggish overall, despite a strong performance by categories driven by gifting items.

Paul Martin, UK head of retail at KPMG, added: “Festive feasts were clearly at the forefront of shoppers’ minds, with the three-month average of like-for-like food sales jumping up by 1.1%: a mean feat considering the stagnation noted the previous month. With price increases looming on the horizon, consumers fully embraced the festive spirit and splashed out on treating themselves.”

IGD chief executive Joanne Denney-Finch said: “The grocery year ended on a high, with a substantial sales increase versus December 2015. Shoppers took their Christmas food and drink spending even closer to the wire than usual, with a record-breaking week leading up to the 25th. This sealed a strong second half of the year for food retailers.

“Looking ahead, eyes are on the possible return of food inflation, with three-quarters (76%) of shoppers anticipating higher prices in 2017. A surge in patriotism could be another important factor, with 45% believing it’s more important to buy British-produced food now the UK has voted to leave the EU.”

Majestic Wine (WINE) has reported a bumper Christmas for its retail stores, with like-for-like sales jumping 7.5% – its best ever festive performance. Total group sales were also up 15.3% over the 10 weeks to 2 January, with underlying growth at 12.4%. Majestic delivered 30% of total annual sales during the Christmas trading period. However, margins slipped 1 percentage point as the group invested in price and accelerated the acquisition of new customers. Naked Wines sales increased 30% in the period, Lay and Wheeler was up 62% and the commercial division declined 0.8%.

CEO Rowan Gormley said: “Delivering strong like for likes in a tough market is a tribute to the hard work that our people put in – right across the business. It is also particularly pleasing that both Naked Wines and Majestic Commercial traded in line with expectations and Lay & Wheeler has maintained its strong growth.

“Our transformation plan is working and we remain on track to achieve our £500m sales goal. We said that we would be better prepared for Christmas than ever – and the numbers show that we did what we said we would do.

“At this stage we are not predicting a change to long-term margin expectations, but we need to retain flexibility to compete in a competitive market.

“Our business is about people and I must say a massive thank you to our teams across the world for their dedication over the peak trading period - they have made me very proud.”

Vimto owner Nichols (NICL) increased revenues 7.3% to £117.3m for the year ended 31 December 2016. The soft drinks groups said in a pre-close trading update that growth had come from both the UK and international businesses. In the UK, sales rose 6.9% against the prior year to £90.7m, driven by sales of the Vimto brand, which were 5% ahead, and incremental revenues from the acquisition of The Noisy Drinks Co. The performance was “significantly” ahead of the UK soft drinks market, which grew by 0.8% in the year to 3 December 2016 [Nielsen], according to Nichols. International sales grew by 8.8% to £26.6m, an increase of £2.2m versus 2015.

“In summary, the board is pleased with the 2016 group sales performance and expects full year profit and earnings per share to be ahead of the prior year and in line with expectations.”

Stevia producer PureCircle has welcomed the confirmation that US Customs and Border Protection (CBP) has released the company’s refined stevia consignments. The shipments were being held in the US and were released following an extensive review of documents provided by PureCircle. The company said it continued to work with the CBP on the removal of the Withhold Release Order (WRO) to stop further disruption to its shipments.

CEO Magomet Malsagov said: “We fully support CBP’s commitment to ensuring that proper and fair labour has been used in the production of any product entering the USA. PureCircle is fully committed to human rights in all parts of its business and supply chain. We operate a robust system of checks and balances and ensure that all our suppliers adhere to a strict Supplier Code of Conduct.

“We are pleased that the CBP has confirmed that PureCircle’s shipments are compliant with law and have been released.”

Shares in the group leapt 8.5% on the news to 306p.

Just Eat has issued an order update for the 12 months to 31 December 2016, which showed growth of 42% across the group and 31% in the UK. CEO David Buttress said: “Just Eat’s reported order growth puts us in a strong position to deliver full year results in line with our previous financial guidance. We enter 2017 with continuing confidence in the business.”

Sports nutrition company Science in Sport (SIS) has announced it is the official sports nutrition supplier to British Cycling, the internationally recognised body for cycling in the UK. The supplier deal will run for four years, effective January 2017, and will see the company support the Great Britain cycling team up to and including the Tokyo 2020 Olympic and Paralympic Games. The Great Britain cycling team will work directly with SiS and its team of sports nutrition experts to create bespoke nutritional strategies to fuel their athletes, including Jason Kenny, Laura Kenny and Philip Hindes.

SiS CEO Stephen Moon said: “Science and innovation underpins everything we do and we are proud to use this expertise to fuel the Great Britain cycling team in the lead up to Tokyo 2020. We are also excited to have the opportunity to work with the substantial British Cycling membership as they seek to achieve their personal goals, and improve their fitness and wellbeing.”

CARR’s Group (CARR) reported this morning that its UK agriculture division has had a strong start to the year in the 18-week period ended 7 January 2017, with compound feed volumes ahead of the prior year. It added that market pressures continued to have an impact but the signs of stability highlighted in the group’s results announcement in November 2016 remained. Fuel volumes were ahead of the prior year, and machinery sales have also shown signs of recovery in the first quarter. The retail business has continued to grow with performance ahead of expectations. “Overall, the agriculture division is performing ahead of the board’s expectations,” the group said. The engineering division had a slower than expected start to the year, due to a significant contract delay in the UK manufacturing business.

CEO Tim Davies said: “We have delivered a strong performance in our UK agricultural operations during the period, supported by improved confidence in the outlook for our core farming customers. However, this has been partially offset by market pressures in the US, relating to falling cattle prices, and the delay of a significant contract in our engineering business, which is now expected to commence towards the end of this financial year.

“The performance during the period once again demonstrates the value of the diversity of our business when operating in challenging market conditions. We are pleased to report that overall we are trading in line with the board’s expectations.”

Shares in Tesco have climbed 3.5% so far to 208p. Sainsbury’s is up 1.7% to 259.2p. Nichols nudged up 0.5% to 1,599.3p. Majestic Wine is up 3.5% to 335.8p.

Yesterday in the City

There wasn’t a great deal of news flow to drive trading activity yesterday, but Sainsbury’s (SBRY) rose 1.1% to 254.8p, Morrisons (MRW) nudged up 0.5% to 237.4p and Tesco was flat at 201.5p ahead of the Christmas update season for the food retailers getting underway this morning.

Marks & Spencer (MKS), which reports on Thursday, was also up 1.2% to 337.7p. Majestic Wine was up 0.9% to 323.1p.

British American Tobacco (BAT) and Imperial Brands (IMB) both climbed 2.2% to 4,675p and 3,616.5p respectively.

Unilever (ULVR) and Diageo were two other FTSE 100 risers, up 1.5% to 3,344.5p and 2,169.5p.

There were no big fallers of note yesterday.

Value meat retailer Crawshaw Group (CRAW) had another bad day, falling 4.6% to 22.2p after its trading update last week said its recovery had gained momentum.

The FTSE 100 index hit record highs after rising 0.4% to7,237.77 points as the pound slumped to a three-month low on continuing concerns over the UK’s exit from the EU.