Morrison cautions on profits as LFL sales fall sharply over Christmas

9th Jan 2014 07:12

- Sales down 1.9 per cent, LFL sales drop 5.6 per cent- Full-year profits to be at bottom end of expectations- Online shopping service 'ready to launch'British supermarket group WM Morrison has admitted that its sales performance over Christmas was 'disappointing' as it warned investors that full-year profits would come likely come in at the bottom end of forecasts.Morrison, regarded as one of the 'Big Four' UK grocers behind Tesco, Sainsbury and Asda, said that total sales excluding fuel and VAT were 1.9% lower than last year in the six weeks to January 5th. Including fuel, sales fell by 3.3%.On a like-for-like (LFL) basis, sales were down 5.6%, falling 7.1% when including fuel. That compares with Sainsbury which said this week that its LFL sales over the festive season were flat on last year, broadly better than what analysts had hoped for.Morrison, which is currently developing an online shopping service with Ocado to compete with its rivals, labelled the key Christmas period as "very challenging" amid a slowdown in market growth."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 this Christmas," the firm said.Nevertheless, Morrison did say that its online shopping service is "ready to launch"."Whilst the sales environment continues to be very challenging, we have continued to manage our business very tightly. The board expects that our full-year underlying profit performance will be towards the bottom of the range of current market expectations."Current forecasts have pencilled in an underlying profit of between £783m and £853m for the year ending February 3rd 2014, down from £901m last year. The consensus estimate is £812m.BC