William Morrison Supermarkets Plc, the smallest of the U.K.’s four main grocery chains, said annual profit will be at the lower end of analyst estimates after a “very challenging” Christmas.
Underlying operating profit for the year about to end will be toward the bottom of a cited 783 million-pound ($1.29 billion) to 853 million-pound range, Morrison said today in a statement brought forward from Jan. 20. Sales at stores open a year or more fell 5.6 percent in the six weeks ended Jan. 5, excluding gasoline, said the company, which reported its seventh straight quarter of declining sales in November.
The retailer cited slowing market growth for the “disappointing” results and said cash-strapped customers kept a tight grip on spending over the Christmas period.
“The difficult market conditions were intensified for Morrisons by the accelerating importance of the online and convenience channels, where Morrisons is currently under-represented, and by targeted couponing which was particularly prevalent in the market,” it said. “Our sales performance was not as strong as we had planned.” Morrison is due to start delivering food bought online tomorrow.
Morrison’s share of the grocery market is being threatened by competition from discounters like Aldi and Lidl and higher-priced supermarkets like Waitrose as shoppers polarize in their habits.
The company said its financial position remained “strong” and that net debt would be in line with a prior 2.7 billion-pound forecast.