UPDATE 2-Morrisons and Tesco shine in Christmas sales battle

VAM Funds names Robert Gordon director of two funds

2018-01-09 10:32:24

* Morrisons beats forecasts with Christmas sales up 2.8 pct

* Morrisons share rise as much as 4.8 pct

* Survey data shows Tesco the best performer at Christmas

* Sainsbury‘s, Asda perform solidly

* Aldi and Lidl still winning market share (Adds detail, CEO comment, Kantar/Nielsen and BRC data, shares)

By James Davey

LONDON, Jan 9 (Reuters) – British supermarket chain Morrisons beat sales growth forecasts over Christmas while industry data indicated market leader Tesco probably outperformed smaller rivals during the festive season.

With Britons facing pressure from slow wage growth and the jump in inflation that followed the 2016 Brexit vote, company updates and data this month have shown they chose to prioritise spending on food and drink over the holiday season.

Shoppers cut back on almost everything other than food in the last three months of 2017, causing the biggest fall in non-grocery spending since 2009, figures from the British Retail Consortium (BRC) showed on Tuesday.

“The divergence between growth in sales of food and non-food has never been so stark,” BRC chief executive Helen Dickinson said.

Shares in Morrisons, the smallest of Britain’s four big supermarket groups, were up 2.3 percent at 1015 GMT after its trading update showed it attracted more customers with competitive prices, expanded premium ranges and an improved online range.

But Christmas trading survey data from both Kantar Worldpanel and Nielsen showed clear market leader Tesco enjoyed the strongest performance of the four chains over the Christmas quarter with total sales growth put at 3.1 percent and 3.4 percent respectively.

That data also showed second placed Sainsbury’s and third ranked Asda performed solidly, although growth at the German discounters Aldi UK and Lidl UK continued to outpace all of the big four, winning market share from all but Tesco.

Kantar said grocery inflation was 3.7 percent in the 12 weeks to Dec. 31.

Shares in Sainsbury’s were up 1 percent, while Tesco was down 1.7 percent, having risen 12 percent over the last three months.

Sainsbury’s and Lidl will publish their trading statements on Wednesday, with Tesco to follow on Thursday.


Bradford, northern England, based Morrisons said group like-for-like sales, excluding fuel, rose 2.8 percent in the 10 weeks to Jan. 7, the bulk of its fourth quarter – well ahead of analysts’ average forecast of growth of 1.7 percent and third quarter growth of 2.5 percent. It said like-for-like volume growth was positive.

Under Chief Executive David Potts, Morrisons is trying to develop a broader business by turning around the performance of its more than 500 UK stores while also pursuing growth in online and wholesale markets. Its performance comprised retail growth of 2.1 percent and wholesale growth of 0.7 percent.

“We were able to differentiate in range, value and service enough for increasing numbers of customers to choose Morrisons,” former Tesco executive Potts told reporters.

But despite beating sales forecasts Morrisons said its profit expectations for the full 2017-18 year were unchanged.

Prior to Tuesday’s update analysts’ average forecast for 2017-18 underlying pretax profit was 371 million pounds ($503.1 million) up from 337 million pounds made in 2016-17.

Potts joined Morrisons in 2015 to lead a recovery after it was badly hurt by the rise of the discounters in its northern heartland and the strategy failures of previous management.

He has now delivered over two years of underlying sales growth. ($1 = 0.7374 pounds) (Additional reporting by Paul Sandle; Editing by Kate Holton and Keith Weir)

Our Standards:The Thomson Reuters Trust Principles.

Original Source