Morrisons Sees First Quarter Sales Fall

Morrisons has had a "solid start" to its financial year despite sales falling 2.6% over the first quarter.

The performance, on a like-for-like basis, included fuel sales, though total sales contracted by just 0.3% as new store openings bolstered business.

However, Morrisons has been hurt by its limited exposure in convenience stores and its lack of an online food offer.

The company, which trails market leaders Tesco, Asda and Sainsbury's, said sales at stores open over a year fell 1.8% when fuel was excluded in the 13 weeks to May 5 - an improvement on the fourth quarter decline of 4.1%.

"This performance reflects a steady improvement from the previous quarter and is in line with our expectations," the firm said, adding that throughout the period the industry had remained very competitive with promotional coupons and vouchers a significant factor.

Morrisons said its expectations for the full year were unchanged and its plans to launch an online food operation by January 2014 were progressing.

Talks with online grocer Ocado on a possible tie-up were continuing, the chain said.

Online and convenience are the two fastest growing areas for Britain's supermarkets as shopping habits change, with consumers increasingly using the internet to shop.

Morrisons has accelerated investment in convenience stores, targeting 100 by the end of the year.

The firm, which unlike rivals produces a lot of the products it sells, said it was doing a better job of telling customers how its offer was better by, for example, highlighting its more than 5,000 trained butchers, bakers and fishmongers, and doing more to make its promotions stand out.

Its chief executive Dalton Philips said: "Our promotions have been more innovative and we are explaining Morrisons' points of difference more effectively.

"These efforts were further reinforced by the horsemeat scandal which helped drive increasing customer recognition of Morrisons' unique supply chain and approach to meat sourcing."

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