Morrisons shares plunge as LFL sales decline worsens in first quarter

7th May 2015 07:03

Shares in Morrisons, the UK's fourth-largest supermarket chain, took a hammering on Thursday as the company reported a tough start to its new financial year with like-for-like (LFL) sales falling deeper into the red.LFL sales excluding fuel fell by 2.9% in the 13 weeks to 3 May, the grocer revealed, reversing an improving trend experienced in the preceding three months.In the fourth quarter of the previous financial year, LFL sales fell by just 2.6%, marking a dramatic improvement on the 6.3% drop seen in the third quarter and 7.6% plunge in the second quarter.While the market was looking for a larger drop of between 3% and 3.3% in the first quarter, that didn't stop the stock from falling sharply in morning trade. By 09:05, the stock was down as much as 7% at 176.1p.First-quarter LFL sales including fuel fell by 6.6% after a 5.1% annual decline three months before.The number of items per basket declined at a year-on-year rate of just 0.1% in the first quarter, though the LFL number of transactions dropped by 3.2%.Morrisons said a "full assessment of the business" is underway and more details will be given at the time of its interim results in September."However, as outlined at the 2014/15 preliminary results, the focus continues to be to invest more for customers in order to build trading momentum," the company said.Augustin Eden from Accendo Markets said Morrisons is "now the runt of the supermarket litter which means it may have least to lose but most at risk in what is set to be a vicious supermarket war".He said that with interest rates and inflation both low, pricing is no longer the issue for the sector."Successfully fighting this particular war will require some updating of current strategies combined with the sort of ingenuity shown by those who have leveraged our love of the internet and technology (in the right way) to transform our shopping habits," Eden said.