WM Morrison’s turnround efforts gathered pace in the first quarter, with sales growth picking up despite industry worries about the impact of rising inflation.
Morrisons enjoyed its first improvement in like-for-like sales and underlying profit for more than five years in 2016, and said today that like for like sales growth picked up further in the first quarter, rising 3.4 per cent excluding fuel compared to the same period last year.
After accounting for the impact of store closures carried out last year, total sales were up slightly less, growing 2.8 per cent.
Rising inflation and expectations of a slowdown in economic growth in the UK have raised concerns about the potential impact on major supermarkets, with Sainsbury’s warning yesterday that slowing consumer confidence and real pay growth were beginning to affect non-food sales.
Supermarkets have historically benefited from higher inflation, which allows them to pass on price increases to customers and boost their profit margins, but the big grocery chains are expected to be more cautious about raising prices than in the past, after losing market share to discounters Aldi and Lidl.
Morrisons noted today that “there was some inflation during the period” as a result of the weaker pound, but it stressed that despite the cost pressures, it would remain focused on “becoming more competitive for customers”.
The latest market share figures from Kantar Worldpanel, released yesterday, did show retailers benefiting from the recent rises, with sales growing at their fastest rate in three and a half years in the three months to April 23.
Kantar said Morrisons was the fastest growing of the big four retailers, with sales up 2.2 per cent.
David Potts, who has worked to return the supermarket to its roots as a value retailer since taking charge in 2015, said:
Our new financial year has started well, thanks once again to the dedication of our team of food makers and shopkeepers. We are improving the shopping trip in many different ways, which is making Morrisons more popular and accessible for customers. These new initiatives in-store, online, in wholesale and services are beginning to build a broader, stronger Morrisons. We are confident we will continue to turnaround and grow Morrisons.