Morrisons reports disappointing sales - UPDATE

7th Jan 2013 07:08

Wm Morrison reported it had missed sales targets in the run up to Christmas as the supermarket's promotions and marketing failed to pull in customers.The retailer said the shaky performance meant full year performance would be "broadly in line with...expectations".The group, which recently announced it had hired TV presenters Ant and Dec to front its new campaign, put the blame for disappointing sales on ineffective promotions and communication of its 'points of difference'.It also said it been beaten by rivals' online and convenience stores - areas Morrisons has only recently entered.On top of this, the economic environment meant consumers were increasingly shopping to a budget and vouchering had become a prominent feature of a highly promotional market, the group added.In the six weeks to 30th December total sales (excluding fuel) were down by 0.9% down 0.5% when fuel was included. Like-for-like sales dropped by 2.5% (or 2.2% including fuel)."In a difficult market our sales performance was lower than anticipated, but we have a strong business and significant opportunities to advance our strategy, as we accelerate our multi-channel offer," said Chief Executive Dalton Philips.ANALYSTS DISAGREEFor analysts at Seymour Pierce "the failure of a sales recovery at Morrison despite soft comparables is more concerning for fiscal year 2014 and it is becoming more inevitable that profits will decline again year-on-year". 'We believe the food industry outlook will remain challenging in 2013/14 as inflation comes back and consumer budgets stay under pressure," they added."Morrison is scale disadvantaged and will struggle to perform in this scenario." Seymour Pierce has cut its fiscal year 2014 forecast by 8% to £850m (previously £927m and consensus £909m). In parallel, their price target now comes in at 230p versus 250p before.