Morrisons hails festive performance

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Morrisons chief executive Dalton Philips said the chain had achieved a good performance in a tough market

Supermarket group Morrisons said it was pleased with Christmas trading after defying the weather to post another improvement in sales.

The UK’s fourth biggest chain said like-for-like sales excluding fuel and VAT grew 1% in the six weeks to January 2 – up on City forecasts of between 0.5% and 0.8%. While sales slowed from 1.3% same-store growth in the quarter to October 31, the group left its full-year profit expectations unchanged.

Chief executive Dalton Philips said the company had risen to the “twin challenges” of a difficult consumer environment and a prolonged spell of adverse weather and added: “This has been another good performance in a tough market.”

The update, ahead of the end of Morrisons’ financial year on January 31, comes at the start of an important week for retailers, which includes further updates from Tesco, Sainsburys and Marks & Spencer.

Morrisons warned in September that it expected a low level of market growth in the remainder of 2010, with a slight rise in prices due to the re-emergence of some commodity price pressures. Last week, data released by market researcher Nielsen Company showed the chain’s market share dropped to 10.8% in the 12 weeks to December 26, compared with 11% a year earlier.

But the company has remained defiant and plans to trial new convenience stores and an online operation this year, as well as creating 5,700 jobs by opening new stores and 300 in manufacturing.

Morrisons said it served an average of two million more customers each week over the Christmas period than five years ago, and in that time has grown total sales excluding fuel by 47%. Mr Philips said smoked salmon and Morrisons’ own brand panettone, a type of sweet bread loaf, were particularly popular over the festive season.

He said it was “almost impossible” to quantify the impact of the wintry weather – but the group did not shut any stores due to the heavy snow and freezing temperatures.

Mr Philips said prices had picked up due to inflation but were still at a “relatively low level”. Looking ahead, he said: “There’s going to be a lot of spending cuts and consumer confidence is very fragile. It’s going to be a tough year ahead.”

Morrisons expects full-year pre-tax profits to the year ending January 31 to be £860 million and has not altered this position. Shares in the supermarket jumped 2% after the Christmas update.

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