Morrison Fails to Snap Sales Spiral as CEO Hails `Progress'

  • Same-store sales drop for fifteenth consecutive quarter
  • Analyst disagrees with CEO's claim of `good progress'

Wm Morrison Supermarkets Plc reported a fifteenth-straight drop in quarterly sales, underlining the size of the task facing new Chief Executive Officer David Potts.

Same-store revenue fell 2.6 percent, hurt by price deflation and a reduction in the amount of money-saving coupons issued to customers, the Bradford, England-based grocer said in a statement Thursday. The median estimate of 16 analysts was for a 2.1 percent decline.

Actions taken by Potts in the first seven months of his tenure have yet to provide much of a boost to financial performance, though the CEO said Morrison made “good progress” in many areas during the quarter. That comment fell mainly on deaf ears, with most analysts saying the supermarket still faces a tough road in its battle against discounters and reviving competitors such as market-leader Tesco Plc.

“To claim you are making good progress on the back of these numbers is bordering on the delusional,” John Ibbotson, managing director of researcher Retail Vision, said by e-mail. “It’s hard to see Morrisons ever making a full recovery.”

Morrison fell 1.6 percent to 174.6 pence at 8:09 a.m. in London trading, extending the stock’s decline for the year to 5.1 percent.

Morrison’s sales performance still trails larger rivals Tesco and J Sainsbury Plc, which posted same-store sales declines of 1 percent and 1.1 percent, respectively, in their most recent quarters. The U.K. grocery industry is beset by falling prices and intense competition as a result of the growing popularity of discounters Aldi and Lidl.

Morrison reiterated its forecast that underlying pretax profit in the second half of the financial year will exceed the first half’s 126 million pounds. Year-end net debt will be lower than a previous forecast of 1.9 billion pounds ($2.9 billion) to 2.1 billion pounds, the company also said, citing working capital improvements and faster than expected property disposals.

Same-store sales exclude fuel and cover the 13 weeks ended Nov. 1.

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