Analysts welcome a full year of growth for Morrisons

 
Helen Cahill
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Morrisons Launches Price Match  Scheme
The sun is shining of Morrisons today (Source: Getty)

Morrisons' share price was climbing this morning after the retailer said that its like-for-like sales were up 1.6 per cent in the third quarter, marking a year of positive same-store sales.

Halloween sales jumped 20 per cent in the period. The company's share price was up 1.2 per cent this morning as a result, and analysts have been impressed by the supermarket's performance in a tough trading environment.

Read more: Forget the Marmite: Morrisons records fourth consecutive quarter of growth

Neil Wilson, markets analyst at ETX Capital, said: "Growth was slower than the second quarter, but still impressive.

"Morrisons is doing well considering the market environment. In-store deflation ran at one per cent as supermarkets slash prices in a price war of attrition. Going forward, with the Unilever-Tesco spat fresh in the memory, Morrisons has got to be careful with how it handles the weaker pound as margins compress further, although overall it’s better placed than most as it sources more from the UK."

John Ibbotson, director of consultancy Retail Vision, said the "once failing brand has finally made a habit of growing".

Ibbotson added:

CEO David Potts’ back to retail basics approach – in which stores have been spruced up, with more local ranges and lower prices introduced – is beginning to pay dividends and tempt back shoppers.

His ruthless decision to close 30 stores and sell Morrisons’ underperforming convenience chain has stopped the rot. The reduction in capital expenditure and paying down of debt is steadily restoring the balance sheet to health.

The new store ranges have managed to "gain traction with shoppers", Himanshu Pal, vice president of Kantar Retail, said.

"These ideas are a step in the right direction, especially as the tough trading environment shows no signs of abating," Pal said.

"But Morrisons will have to watch out not only for the ever-present discounter threat but also a resurgent Tesco, and suppliers who will look to seek higher prices during commercial negotiations to compensate for rising input costs."

He picked out the best new ideas that Morrisons has been using to grow sales:

  • Increased customer service staff in stores
  • More space for ‘free-from’, Nutmeg clothing, and other aspirational categories
  • Introduction of 'The Best' premium range - which is going to be extended
  • Targeted marketing campaigns, e.g. student discounts
  • Greater focus on e-commerce through partnerships, such as the recent deal with Ocado

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