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Morrisons (MRW) group like for like (ex fuel) sales rose 5.6% in the 13 weeks to 4 November driven by a surge in wholesale revenues, but core retail sales growth slowed.

Including fuel group like for like sales were up 6%, with wholesale organic sales rising 4.3% and retail up 1.3%.

Retail like for like sales had been up 2.5% in the second quarter and 2.1% in the third quarter of 2017.

Morrisons said retail LFL sales growth eased without the impact of the favourable weather and World Cup which benefitted its second quarter.

Like for like transaction numbers were up just 0.2% in the quarter – having been up 2.6% in the second quarter. Items per basket fell 1.5% in the period, down from 1.4% growth in the second quarter and 3.6% growth in the third quarter last year.

However, Morrisons said overall sales growth remained “strong” with “better and broader offer for customers across the whole store”.

During the period, the supermarket launched the Morrisons More app, allowing customers to collect and redeem Morrisons loyalty points digitally. It also started to fulfil home deliveries from a second customer fulfilment centre at Erith, and launched a store-pick online service from a further six stores taking the total to 20.

Its third new store this year opened in Acocks Green, Birmingham, and is “trading well”, while its “Fresh Look” programme for the 2018/19 year is almost complete, with a further 60 stores now improved in time for Christmas.

CEO David Potts commented: “After another period of strong growth, and with more customers enjoying shopping at Morrisons, we have now completed three years of positive like for like.

“Our exceptional team of food makers and shopkeepers are providing good quality food at great prices, and building a broader offer in store, online and for our wholesale customers.”

Morrisons shares have dropped 3.8% to 244.8p on the weaker than expected retail sales performance.

Morning update

UK retail sales increased by just 0.1% in October, according to the latest monthly BRC KPGM Retail Sales Monitor, up from fall of 1% in October 2017.

Over the three months to October, in-store sales of non-food items declined by 2% on a total basis and 3.3% on a like-for-like basis. Total non-Food retail sales in the UK decreased 1.0% on a like-for-like basis and increased 0.1% on a total basis.

Food sales increased 1.2% on a like-for-like basis and 2.3% on a total basis over the three month period, though this is below the 12-month Total average growth of 3.5%.

BRC chief executive Helen Dickinson commented: “Overall, retail sales growth remains low by historical standards. Sales in October saw only a slight uplift on the previous year, as cautious consumer spending continues into the final quarter of the year.

“Brighter weather and the anticipation of better deals in the Black Friday November sales have dampened demand for discretionary purchases. Moreover, low real wage growth over an extended period has left consumers with less money in their pocket, squeezing retailers’ margins in the face of higher costs.

“Furthermore, the very real possibility of a no-deal Brexit presents a huge challenge for retailers who must contend with the prospect of higher import prices, and further drops to consumer demand. Time is running out and it is essential that the Government, the EU and the UK Parliament come to an agreement on the backstop and delivers a Brexit deal detail which gives confidence to both consumers and retailers, and avoids squeezing real wages further.”

Paul Martin, UK head of retail at KPMG, added: “October kicks off the all-important golden quarter, with some retailers earning the majority of their annual profits in these months alone. But with October’s like-for-like sales flat lining at 0.1%, it was a bit of a non-starter.

“Demand was mainly dampened by continued economic uncertainty, as well as the anticipation for the deep discounting ahead – especially now that Black Friday weekend has become such a permanent feature.

Jon Woolven, strategy and innovation director at IGD said of food sales: “After a strong run earlier this year, food and grocery sales have settled into a new pattern of modest growth, broadly in line with inflation. The run up to Halloween delivered its usual boost, on a similar scale to previous years.”

Associated British Foods (ABF) has grown its core full year profits despite a collapse in the profitability of its sugar division.

Adjusted operating profits were up 3% to £1.4bn in the year to 15 September 2018 and up by 5% on a constant currency basis.

Adjusted profit before tax was up 5% to £1.37bn on sales up 1% (3% at constant currency) to £15.6bn.

However, statutory profit before tax dropped 19% to £1.28bn given the benefit of a one-time profit on the disposal on businesses in the previous financial year.

Grocery revenues were up 1% to £3.42bn in the period (up 4% at constant currency) with adjusted operating profits up 11% (14% at constant currency) to £335m driven by strong growth in Twinings Ovaltine and improved margin at George Weston Foods in Australia.

Twinings Ovaltine made “excellent progress” in profits and “especially strong” revenue growth led by growth in Thailand.

However, losses remained “unacceptable” at Allied Bakeries, although some progress has been made with cost reduction programmes and price increases. Against a background of a continued increase in the market share of private label bread, investments in the Kingsmill and Allinson’s brands have included new product launches for Super Seeds and premium craft loaves

Jordans has continued to drive international expansion, delivering strong revenue growth in Australia, New Zealand, Canada and Brazil, while at AB World Foods, Patak’s continued to deliver market share growth following the launch of paste pots and Blue Dragon extended its international sales growth in Canada, Scandinavia and Australia.

Acetum, the Modena-based balsamic vinegar business acquired last October, is “progressing well”.

Its sugar division had a far tougher year, with revenues down 15% to £1.73bn and adjusted operating profits collapsing by 51% to £123m.

ABF said the culprit was lower EU prices which adversely affected its UK and Spanish businesses.

The global supply of sugar moved into surplus in the year and the world market sugar price reduced this year. The EU sugar regime ended in October 2017 and EU prices have actually fallen faster and more significantly than expected as a consequence of substantially higher EU sugar production in 2017/18.

In the UK, sugar production increased considerably to 1.37 million tonnes reflecting record beet yields and an increase in crop area. However, the latest sugar production estimate for 2018/19 is a reduction to some 1.05 million tonnes as a consequence of late drilling this spring followed by the unusually dry summer. British Sugar stocks are expected to decline next year as a result.

Sales at its key Primark clothing retail division were 6% ahead of last year at actual exchange rates and 5.2% ahead at constant currency, driven by increased selling space offset by a 2.1% decline in like-for-like sales. Operating profit margin increased to 11.3% from 10.4% and, as a consequence, adjusted operating profit was 13% ahead at constant currency.

Chief executive George Weston commented: “This was another year of progress for the group. We continued to pursue the opportunities to grow our businesses with a gross investment of £1.2bn.

“Strong profit performances were delivered by each of Primark, Grocery, Agriculture and Ingredients. These more than offset the decline in Sugar profit which was caused primarily by low prices in the first year after the structural change in the EU sugar regime. Looking ahead, management have clear plans for further investment and for pursuing opportunities for business improvement.”

Elsewhere, the collapse of Palmer & Harvey has hit profits at tobacco giant Imperial Brands (IMB) in the full year to 30 September 2018.

Net revenues were up 2% in the period to £30.5bn, with tobacco sales up 1% and tobacco alternatives up 1%.

Reported tobacco volumes were down 3.6% in the period, which represents an outperformance of the wider industry and its share grew in a number of priority markets.

Imperial said it saw strong growth in Next Generation Products focused on smoker conversion, with net revenue growing strongly to £200m driven by blu growth and an expanding innovation pipeline.

Reported earnings per share were down 2.7% at actual rates impacted by a write-off due to the collapse of Palmer & Harvey write-off and adverse currency movements. Operating profit was up 5.7% to £2.4m.

Imperial took a £110m hit in the year from the administration of its UK distributor P&H.

Chief executive Alison Cooper commented: “FY18 was a successful year of delivery against our strategy and I’m pleased with the progress we are making in creating something better for the world’s smokers. In NGP our main focus is on transitioning smokers to blu, a significantly less harmful alternative to cigarettes.

“NGP also offers additive opportunities for our shareholders and the success of the international rollout of myblu has put us in a strong position to further invest and accelerate sales growth in FY19.

“In tobacco we focus on providing smokers with an evolving portfolio of high quality brands. Following our additional brand investment in tobacco over the past two years, we have increased Growth Brand volume, share and revenue in our priority markets.

“Our financial delivery was strong, with revenue and earnings growth, high cash generation and a further dividend increase of 10 per cent. Capital discipline remains central to all our activities, providing funds for investment and enhancing returns. We have the strategy, assets and capabilities to realise the significant opportunities presented by a changing environment and to generate growing returns for our shareholders.”

Finally, brewer and pub company Greene King (GNK) has CEO Rooney Anand will step down from his role at the end of the current financial year ending 30th April 2019.

The process to appoint his successor is “well advanced” and a further announcement concerning succession is expected to be made early in the new calendar year.

Chairman Philip Yea said: “Rooney has been CEO of Greene King since 2005 and has proven himself to be one of the most successful and longest serving business leaders our industry has seen, transforming our company over this period. He will leave us better positioned for the future.”

Rooney Anand commented: “It has been a great privilege to lead Greene King for nearly 14 years and to serve as a director for 18 years. As we announced recently, the business is performing in line with our expectations and ahead of the market. With a strong team and business culture firmly in place, the time is now right for me to hand over the baton.

“I look forward to supporting Phil, the board and the management team with the succession plan, and delivering our plans and results for the second half of the financial year.”

On the markets this morning, the FTSE 100 has edged down 0.1% to 7,095.4pts so far.

ABF shares are up 2% to 2,435p and Imperial Brands shares are also up 2% to 2,696p following this morning’s annual results.

Greene King shares are down 0.4% to 495p.

Other risers include Marks & Spencer (MKS), up 0.6% to 299.3p, WH Smith (SMWH), up 0.5% to 1,950p and Greggs (GRG), up 0.4% to 1,187p.

Fallers include Morrisons delivery partner Ocado (OCDO), down 1.9% to 820.8p, Premier Foods (PFD), down 1.8% to 38.4p, PayPoint (PAY), down 1.1% to 821p and Tesco (TSCO), down 1% to 215.2p.

Yesterday in the City

FTSE 100 started the week consolidating its gains from the last week, rising a further 0.1% to 7,103.8pts.

However, it was a tough day for a number of large consumer stocks, with Just Eat (JE) losing 4.2% back to 635p, FeverTree (FEVR) dropping 2.9% to 2,808p, Coca-Cola HBC (CCH), down 3.4% to 2,288p and Associated British Foods down 2.6% to 2,388p ahead of its annual results this morning.

Also falling were Domino’s Pizza Group, down 3.6% to 281.9p, Cranswick (CWK), down 2.3% to 2,838p, Ocado (OCDO), down 1.9% to 836p, SSP Group (SSPG), down 1.8% to 675p, Sainsbury’s (SBRY), down 1.7% to 313.2p and Marks & Spencer (MKS), down 1.6% to 297.6p,

The day’s risers included some key international FTSE 100 names such as British American Tobacco (BATS), up 1.9% to 3,407p, Diageo (DGE), up 1.7% to 2,677.5p and Imperial Brands (IMB), up 1% to 2,643p ahead of its annual results this morning.

Also on the up were TATE & Lyle (TATE), up 1.4% to 678.6p, AppleGreen (APGN), up 2.4% to 558p, Hotel Chocolat (HOTC), up 2.3% to 291.5p and Finsbury Food Group (FIF), up 1.7% to 117p.