British supermarket group Morrisons has reported a seventh straight quarter of underlying sales growth and said its overall performance was improving under new chief executive Rami Baitieh.
The group, owned by US private equity firm Clayton, Dubilier & Rice since 2021, said in a trading update that like-for-like sales excluding fuel and VAT sales tax rose 4.6% in its fiscal first quarter to 28 January – its strongest growth for three years.
Total revenue, excluding fuel, increased 3.9% to £3.9 billion (€4.6 billion) during the quarter.
Business Improvement
Former Carrefour France boss Baitieh, who became CEO in November, said Morrisons' product availability, waste and innovation were all improving.
"Our key customer metrics are improving and complaints – which in many ways are the canaries in the retail coalmine – are down almost 60% in the last 20 weeks," he said.
However, industry data published on Tuesday (26 March) showed Morrisons continuing to lose market share to rivals including industry leader Tesco and No. 2 Sainsbury's, as well as discounters Aldi and Lidl.
The data from researcher Kantar showed Morrisons had a UK market share of 8.7% in the 12 weeks to 7 March, down 10 basis points on the year.
The company added that it has developed new plans for long-term and sustainable growth in wholesale, convenience, franchise, export markets and global sourcing and is "moving quickly" to implement them.
"In our franchise business, for example, we have built a new team specifically to accelerate new customer acquisition, and recently we have opened, on average, three franchise convenience stores a week and we intend to open many more in the coming months," Baitieh added.
Analyst Comment
Eleanor Simpson-Gould, senior retail analyst at GlobalData stated, “Morrisons is undergoing drastic overhauls of its operations, announcing the sale of its petrol filling business to MFG in January this year for £2.5 billion (€2.9 billion) and the near completion of McColls store conversions. Whether the grocer has entered into negotiations to sell its Rathbones bakery manufacturing business, to relieve its debt burden, was not disclosed.
“With the grocer at a critical stage to decrease debt and improve sales, this year will undoubtedly require Morrisons to take dramatic steps to increase its agility and profitability to assure stakeholders that long term growth is possible.”
News by Reuters, additional reporting by ESM.
