UK: Morissons to announce 2% sales drop
Clive Black, analyst at Shore Capital, said: "Morrisons has been under performing the British supermarket scene since Q4 2011, despite considerable in-store category reviews, a material store modernisation programme and the opening of new space on a par in percentage terms with its major competitors, Asda and Tesco, both of which are ratcheting down store development programmes."
The retailer is lagging its rivals partly because it does not sell food online and has only a small convenience store business, which are the fastest growing segments of the food retailing industry.
However, Morrisons is also losing customers in its heartland of northern England to discounters such as Aldi.
Morrisons does have plans to launch an online food business, and is in talks with Ocado about a potential tie-up.
Caroline Gulliver, analyst at Espirito Santo, said that Morrisons should begin to recover this year but that margins and profits could be sacrificed to drive sales.
She said: "It is well known that Morrisons is underperforming due to its reduced exposure to convenience store and online sales growth. However, we also know from our survey results that customer perceptions of Morrisons' quality, price and promotions are also under pressure."
Source: telegraph.co.uk
