The supermarket’s sales fell 6.3 per cent on the year, on a like-for-like basis – an improvement on the 7.6 per cent fall in the previous quarter.
Its shares jumped by 6.22 per cent on figures showing that the trend for customers buying less per visit might be easing.
The supermarket is pushing a new card scheme to give discounts to match price-cutting competitors.
“Morrisons is meeting the challenges created by a period of intense industry competition and structural change with quick and decisive action,” said chief executive Dalton Philips.
“We are the only supermarket that is price-matching the discounters.”
But analysts are sceptical that the plans will deliver for the supermarket, particularly when faced with tough competition from the so-called hard discounters.
“We are unconvinced that Morrison’s Match & More card will significantly affect its position versus Aldi and Lidl,” said S&P Capital IQ’s Carl Short, cutting his 2016 earnings per share estimate by seven per cent to 13p.
Short has also updated his advice, urging investors to sell the stock.