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Morrisons blames Brexit as it falls in the festive grocery race

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Morrisons today blamed a string of problems for a drop in sales as it appeared the loser in the Christmas supermarket shopping wars.

The grocer reported a 1.7% fall in same-store sales for the second half of the year to January 5 as its stores operation struggled and its wholesale arm’s growth flatlined.

Chief executive David Potts blamed prolonged political uncertainty hitting spending, rivals discounting heavily and underestimating the impact of a decision to rein in Black Friday promotions for the sales fall.

Potts said: “The trading conditions remain challenging and the customer uncertainty of last year did persist."

He said the December election had been “a bit disruptive” and added: “There is going to be uncertainty in the market until Brexit becomes clearer. It’s sort of had a Christmas break but it will be back I’m sure. We would always expect the market to remain very competitive."

The retail chief also admitted Morrisons should have thrown more marketing spend behind certain products, with sales of vegan products up 100%, free from food 30% and low-alcohol beers and wines 64%.

Thomas Brereton, a retail analyst at GlobalData, said: "Morrisons does not need to overhaul its strategy, management or product ranges. Its focus on expanding its online presence (through Amazon as well as in-house operations) remains the correct strategy, and – coupled with growing wholesale partnerships and savvy store estate management – stands Morrisons is good stead for 2020."

Jefferies analyst James Grzinic said: "Morrisons' priority is now to recover relative sales momentum."

Kantar data today put Morrisons and Asda as the laggards over Christmas, with Lidl, Aldi and Ocado the strongest performers. Sainsbury’s, Tesco, Marks & Spencer and Waitrose report on trading this week.