Morrisons feels the pinch over Christmas

11th Jan 2015 10:21

Retailer Wm Morrison is expected to announce that it was the worst-performing supermarket among the industry's big four over the Christmas season.City analysts expected the group to post a 3.8% drop in like-for-like sales for the six weeks to 4 January, worse than the 0.3% fall posted by Tesco for the festive period and the 1.7% decline Sainsbury experienced in its latest quarter.Food and clothing retailers have been under pressure over the Christmas period, and a decline in like-for-like sales for Morrisons would heap pressure on Dalton Philips, the group chief executive, whose £1bn investment to lower prices is still to be judged.Philips opted to cut prices in the company's stores after the retailer registered a 5.6% decline in revenue last Christmas and analysts believe the group could reap the benefits of lowering prices before its rivals followed suit."Both Sainsbury's and Tesco have reported better-than-expected Christmas sales and we think Morrisons also would have benefited somewhat from customers spending a bit more over the holidays," said Pradeep Pratti, analyst at Citigroup."The key question for management on Tuesday would be how much Morrisons would need to incrementally invest in prices in response to the raft of cuts announced by all the other big supermarket chains this week."A number of retailers, including Debenhams, Burberry, Asos, Home Retail Group and Primark, will also be releasing trading updates in the week beginning 12 January, with analysts expecting Debenhams to post a 1% rise in like-for-like sales.With shoppers' habits changing and an unseasonably warm autumn, clothing and food retailers have struggled in the lead up to the Christmas season."After the first week of trading updates, it should come as no surprise that winners over Christmas appear to be the more housing-related, home and electrical categories, with food and clothing having a torrid time," Investec analyst Kate Calvert.