Morrisons Quarterly Sales Beat Forecasts, Silent On Sainsbury's-Asda
Morrisons, Britain's fourth biggest supermarket operator, beat forecasts for first-quarter underlying sales growth helped by an expansion of its wholesale business.
The company, based in Bradford, northern England, also said on Thursday that its expectations for the 2018-19 year were unchanged.
Its trading statement made no reference to last week's 7.3 billion pound bid by industry No. 2 Sainsbury's for No. 3 Walmart's Asda - a deal that would overtake market leader Tesco.
Morrisons said group like-for-like sales, excluding fuel, rose 3.6 percent in the 13 weeks to May 6, its fiscal first quarter.
That compared to analysts' average forecast of 2.8 percent and marked a tenth straight quarter of growth, following growth of 2.8 percent in the previous quarter.
Morrisons said like-for-like sales increased 1.8 percent in both its retail and wholesale operations.
Sainsbury's merging with Asda would be a major challenge for Morrisons. While Morrisons would be No. 3 in the industry, it would be about a third of the size of Sainsbury's-Asda and Tesco.
However, analysts say Morrisons would be well positioned to acquire stores if the competition regulator clears Sainsbury's-Asda on the condition of significant store disposals.
They say Morrisons could also benefit from the distraction of the deal to Sainsbury's and Asda's operations in the time before it completes.
Some analysts have said Morrisons could even consider a bid for Sainsbury's.
Shares in Morrisons, up 12 percent so far this year, closed Wednesday at 245.4 pence, valuing the business at 5.78 billion pounds.
Prior to Thursday's update analysts were on average forecasting a 2018-19 underlying pretax profit of 400 million pounds, up from 374 million pounds in 2017-18.