5th November 2015
Shares in Morrisons fell on Thursday morning as the embattled supermarket reported another drop in sales primarily as a result of easing back on promotional vouchers.
In its latest market update the retailer said that in the 13 weeks to 1 November total sales excluding fuel were down 2%.
By 09:28, shares in the group had tumbled by 3% or 5.53p to 171.97p.
However the business added that its financial position “is strong and improving”.
Net debt was £2.1bn at the end of the third quarter and it expects at 2015/16 year-end to be lower than its previous guidance estimate of £1.9bn-£2.1bn.
Chief executive David Potts said: “The business is moving at pace on the long journey towards improving the shopping trip for customers.
“Our priorities for the rest of the year are unchanged – to stabilise trading, reduce costs and further improve the capability of the leadership team. We are making good progress in many areas and customers are noticing improvements.”
The business still anticipates that underlying profit before tax will be higher in the second half of 2015/16 than the first.
The major supermarkets have all been feeling the pressure over recent years as a result of the rising popularity of the so-called “hard discounters” including Lidl and Aldi.
In September, Morrisons announced it was selling 140 of it loss-making “M” local convenience stores and in March it reported that annual profits had collapsed by 52%, marking its poorest results in eight years.
Commenting on the latest numbers, Graham Spooner, investment research analyst at The Share Centre said: “For long suffering investors who have seen the shares fall by around 38% over the last two years there are some positives worth noting. The group has highlighted its solid financial position and believes debt is expected to be lower than previous guidance by the year-end.
“Despite this, we continue to recommend Morrison’s only as a ‘hold’ for medium risk investors with a balanced portfolio.For investors interested in the sector, our preferred company to ‘buy’ is Sainsbury’s as the company leverages its range of shopping channels, diversifies its products and services and focuses on flexibility and convenience.”