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'Unusually challenging' Christmas for supermarkets

Oscar Williams-Grut
·Senior City Correspondent, Yahoo Finance UK
LONDON, UNITED KINGDOM - 2020/01/06: Shoppers are seen with Morrison shopping bags outside a branch of Morrison supermarket in north London. On Tuesday 7 Jan 2020, Wm Morrison Supermarkets will release its Christmas trading statement. Wm Morrison Supermarkets PLC is one of the largest chains of supermarkets in the United Kingdom. (Photo by Dinendra Haria/SOPA Images/LightRocket via Getty Images)
Morrisons reported falling festive sales. Photo: Dinendra Haria/SOPA Images/LightRocket via Getty Images

Morrisons (MRW.L) reported falling sales over the crucial Christmas period, with the supermarket’s CEO blaming “unusually challenging” conditions.

Morrisons said Tuesday same store sales fell by 1.7% in the 22 weeks to January 5. The slump was driven entirely by a slowdown at its supermarkets.

Morrisons didn’t break out sales for the 9 weeks up to Christmas day but Bruno Monteyne, a retail analyst at Bernstein, forecast a fall of 2.6% in the period based on Tuesday’s numbers.

The sales slump came as market research firm Kantar Worldpanel said separately Tuesday that all of the ‘Big Four’ UK supermarkets lost market share over Christmas.

“There was no sign of the post-election rush many had hoped for in the final weeks before Christmas, with shoppers carefully watching their budgets,” Fraser McKevitt, head of retail and consumer insight at Kantar, said in a statement.

Morrisoins chief executive David Potts said it had been “an unusually challenging period for sales” but said Morrisons’s “execution was strong and our profitability robust.”

“As always, we will take some learnings into the new year, and look forward to 2020 with a strong plan and solid foundations on which to continue to grow,” Potts said.

Potts said profit for the year was expected to be in-line with forecasts despite the slide in sales, thanks to cost cutting.

Shares in Morrisons rose 2.5% in early trade in London. Alongside the Christmas update, the supermarket also published stats on trading between August and November 2019. Sales in the quarter were down 1.2% but this was ahead of City forecasts, Monteyne said.

While the ‘Big Four’ — Morrisons, Tesco (TSCO.L), Sainsbury’s (SBRY.L), and Asda — all lost market share over Christmas, Kantar’s data showed that German discounters continued to grow strongly over the Christmas period.

Lidl was the fastest growing supermarket in the 12 weeks to 29 December 2019, with sales up 10.3% according to Kantar. Meanwhile, rival Aldi said Monday its festive sales passed the £1bn mark for the first time.

Grocery spending across the supermarket sector reached £29.3bn over Christmas, Kantar said. While this was a new record high, it was just 0.2% higher than the total supermarket spend over Christmas 2018. This was the slowest annual growth in sales since 2015, Kantar said.

Sparkling wine sales fell by 8% over Christmas, according to Kantar, while sales of Christmas puddings fell by 16% and Turkey sales declined by 1%.