Morrisons sales fall again as online debut approaches

Morrisons’ like-for-like sales for the third quarter fell 2.4% with CEO Dalton Philips insisting the retailer will return to positive like-for-like growth in Q4.

Overall sales grew 1% for the 13 weeks to 3 November in a quarter that Philips described as tough. He said growth in the whole market had slowed significantly in the last quarter as consumers tightened their belts having spent heavily during the hot weather in July. Market growth in the last quarter was just 1.8% compared to 3.2% over the previous three months.

Morrisons confirmed it was set to launch its first online grocery deliveries in January in the Warwickshire area. The deliveries will be supplied directly from the Dordon CFC it is sharing as part of its tie-up with Ocado.

Shortly after, Morrisons will start servicing Yorkshire via a delivery spoke in Leeds. By the end of 2014, the retailer said it would be able to supply around 50% of UK homes, including London. “By this time next year we will be able to deliver to 13 million homes,” said Philips.

He again put Morrisons’ sluggish sales down to the headwinds created by its lagging behind rivals in online and convenience. Morrisons currently has 69 M Local convenience stores, half of which are in London and the South East, and today it reaffirmed plans to have 100 c-stores by the end of the year. It also revealed plans to open a further 100 next year.

Philips said 400,000 transactions were made through M Local stores last week.

Morrisons also said it had made good progress in converting its stores to the new fresh format concept. A further 42 stores were converted during the quarter and it is on track to convert 100 by the end of the year.

Group CFO Trevor Strain said sales at these stores were “very much in line with its expectations”.

Citing the recent Kantar Worldpanel figures that showed for the most recent four-week period Morrisons growth was 2.5%, he said the retailer was coming out of Q3 with momentum and that he expected positive like-for-like growth in the next quarter.

However he stopped short of calling this a turning point as it would be against very soft comparables.

Morrisons will reveal more details of its online strategy later this month.