UK supermarket Morrisons' sales growth slows in 'softer' market
By James Davey
LONDON (Reuters) -British supermarket group Morrisons' underlying sales growth slowed in its third quarter, reflecting what its new boss said was a "noticeably softer" market.
Former Carrefour France boss Rami Baitieh joined Britain's fifth-largest grocer as CEO in November last year, and in January said its performance was not good enough.
His turnaround strategy has focused on improving Morrisons' price competitiveness, product availability and its 'More Card' loyalty programme. A scheme to price match discounters Aldi and Lidl on key items was introduced in February.
Morrisons said on Thursday its like-for-like sales, excluding fuel and VAT sales tax, rose 2.9% in the 13 weeks to July 28, having been up 4.1% in its second quarter.
Despite the slowdown, Baitieh said the group made "good
headway" in the quarter.
"Like-for-like sales remained positive, the switching data improved year-on-year and although the market was noticeably softer in Q3, our relative position improved and our market share stabilised," he said. Switching data measures customers defecting to other supermarkets.
However, the latest monthly industry data has shown Morrisons still significantly underperforming the sales growth of market leader Tesco and No. 2 Sainsbury's, with Morrisons' market share slightly down on the year at 8.5%.
Morrisons differs from its main rivals in that it also has its own production operations, making half of the fresh food it sells.
Analysts say that since its purchase by private equity firm CD&R, Morrisons has been hamstrung by debt, which was 4.0 billion pounds at the end of the quarter, down from peak of 6.2 billion pounds.
Separately on Thursday, Morrisons announced a property deal with net proceeds of 331 million pounds which would further reduce leverage.
Morrisons' total sales ex-fuel in the third quarter were 3.88 billion pounds, up 2.1%, while underlying earnings before interest, depreciation and amortisation (EBITDA) was 239 million pounds, up 10.6% on an ex-fuel basis.
It forecast fourth quarter and full year EBITDA would be up year-on-year.
The group also said store workers' pay would increase to 12 pounds an hour from October.
(Reporting by James Davey; Editing by Paul Sandle and Mark Potter)