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Wm Morrison confirmed its position as one of the big retail losers this Christmas, although the supermarket chain avoided a profit warning.
Dalton Philips, chief executive, said Morrison had failed to entice enough “floating” shoppers, blaming lacklustre promotions, an embryonic convenience arm and the lack of an online food business.
Mr Philips said Britain’s fourth-biggest supermarket chain had struggled to “give that floating customer a reason to say hey, at Morrison they have got great value and they do some things better than everybody else”.
He said the group had also failed to distinguish itself from rivals in a sea of “me too” promotions.
Morrison, a winner in previous Christmases, had also suffered the “major headwind” of not having a significant convenience and online business.
The comments came as Morrison said sales at stores open at least a year fell 2.5 per cent year-on-year in the last six weeks of 2012, excluding fuel and VAT.
The figures were slightly better than the 2.8 per cent fall forecast by some analysts.
However, analysts at Citi said the performance was flattered by an additional day of trading, which may have boosted the performance by 1-2 percentage points.
Mr Philips denied that the group was “disenfranchising” its core customers, with revamped stores, including exotic fruit and vegetables and the use of misters to keep produce fresh, particularly given increasing competition from the so-called hard discounters such as Aldi and Lidl.
“It is just not factually correct,” he said, pointing to strong growth from its “M Savers” value range.
Mr Philips also signalled that Morrison would unveil a move into online grocery retailing later this year, when it announces full-year results in March.
He said he was “100 per cent confident” he would be with the group in March to update the City, despite the deteriorating performance.
One top 10 shareholder said he continued to support Mr Philips.
“They have got a very difficult environment out there, but he’s painfully honest in what needs to be done, and they are tackling these things,” said the shareholder.
However, another top 10 shareholder said Morrison had done a good job in cutting costs to address the sales weakness, but this “probably does indicate that at some point shortly they are going to have to rebase their profits in some way”.
Mr Philips said profits for the year to February would be “broadly in line with expectations”, holding the shares broadly flat at 257p.
However, Clive Black, analyst at Shore Capital, cut his forecast of this year’s pre-tax profit from £916m to £863m. Philip Dorgan at Panmure Gordon cut his forecast of pre-tax profit in the year to March 2014 from £866m to £811m and in 2015 from £895m to £800m.