Supermarket group Morrisons needs a strong final quarter to hit ambitious targets and Questor is concerned the signs are not looking good.
The latest unofficial trading update from research firm Kantar does not make for good reading. Morrisons’ like-for-like sales have declined by 0.8pc in the four weeks ended December 8, according to Kantar. In Morrisons’ defence, the most important three weeks of the Christmas trading period remain. And Morrisons is also open for an extra two days this year, with trading on Boxing Day and New Year’s Day.
However, on the numbers we have here, it looks like Morrisons has left it too late and could well have to issue a profit warning.
The group was slow to open the local convenience store formats and is only now building up its online capability. This has left it exposed as sales in the core superstores have suffered from customers with falling real incomes and increased competition from discounters such as Aldi and Lidl.
Analysts at Shore Capital pointed out that Morrisons needs to return to like-for-like growth in the fourth quarter to hit full-year targets, adding: “The heat is certainly on for management to deliver a material improvement in across-the-board sales growth over the important Christmas period.”
Morrisons’ management stressed that full-year targets remain unchanged in its most recent trading update.
