'Dire trading persists' at WM Morrison, says Shore Capital

8th May 2014 09:26

Shore Capital Stockbrokers remains a seller of WM Morrison after the supermarket's first-quarter update showed that 'dire trading persists'.The broker said that Morrison's "trading woes" continued in the first quarter with sales shrinking "against very favourable comparatives".Like-for-like sales at the grocer declined by 7.1% excluding fuel in the 13 weeks to May 4th, well below Shore's -4.5% prediction, which was "especially weak" when compared with the 1.8% fall registered the previous year and the fourth-quarter decline of around 5-6%, the broker said.The broker said it is not making any changes to its "bottom-of-company-guidance profit expectation" of £325m for the full year, equating to earnings per share of 10.3p."With such weak trading, we cannot yet call whether or not we have come to the end of the downgrade cycle for Morrison's. Additionally, we are not yet confident that the contagion of gross margin investment by the supermarkets has come to an end."Until the point it is reached it is equally challenging to be more positive on the group's shares, we reiterate our 'sell' recommendation."The stock was down 1.5% at 188p by 09:26 on Thursday.BC