Supermarket reports overall growth, but that was driven by fuel as grocery sales declined
Morrisons has blamed inflationary pressure and subdued consumer sentiment for a grocery sales decline in the second quarter.
Reporting on its figures for the 13 weeks to 1 May, the supermarket said a very challenging trading environment led to a 6.4 per cent fall in like-for-like sales, although it added that sales picked up towards the end of the quarter helped by a strong performance over Mother’s Day and Easter.
Overall revenue for the 13 weeks was £4.6bn, a 2.6 per cent rise on last year, however that was primarily down to fuel sales.
In April, Morrisons launched one of its biggest-ever price-cut campaigns, involving over 500 products and lowering the price of over a quarter of entry-level products to help customers with the impact of significantly increased household and living costs.
Adjusted EBITDA grew £9m to £71m, compared to the same period in the prior year, reflecting recovery of profit from areas impacted by Covid and cost savings.
On 9 May, Morrisons acquired the entire McColl’s convenience business from the administrators, comprising 1,160 stores - including 270 Morrisons Daily branded stores - together with 16,000 staff. The acquisition is currently under investigation by the CMA.
Chief executive David Potts said: “In a very fragile and difficult consumer environment, Morrisons has continued to deliver a resilient performance. This quarter traded over a period of significant Covid restrictions last year when travel and hospitality were both severely limited. As those two activities returned to more normal patterns this year, we saw very strong growth in fuel sales but a step back in grocery.
“Retail like-for-like sales in the quarter were also impacted by the discounts we offered last year to NHS staff, teachers, farmers and Blue Light cardholders, as a thank you for their amazing work on behalf of the nation through Covid.
“In April we launched one of our biggest-ever price-cut campaigns, which included over 25 per cent of our entry level products. But these are serious times and there is further serious work ahead of us as we help customers and colleagues face into the highest inflation for 40 years.
“Covid brought into sharp focus the competitive advantage, flexibility and speed that owning our own manufacturing operations brings. Our 20 food maker operations around the country are playing an important role in helping us to deliver great value and quality to our customers during another difficult period.”