Morrisons has been gifted a welcome present over the Christmas period in the form of a solid boost to sales, though it has kept its profit forecasts the same.
The supermarket also said this morning that its previously announced tie-up with convenience store chain McColl's will kick off this month following the completion of trials.
Shares rose on the update, and were up 4.5 per cent in early trading.
The supermarket said sales for the last six weeks were up 3.7 per cent compared to a year ago, and for the 10 weeks to 7 January, group like-for-like sales rose 2.8 per cent.
It said an increasing number of customers were heading to the supermarket, with like-for-like transactions up 2.3 per cent year-on-year. Sales of its premium range "Best" were up 25 per cent, which it attributed in part to the broader range on offer.
Online sales were also up more than 10 per cent.
Morrisons said its year-end expectations are unchanged.
Why it's interesting
Morrisons' Christmas trading in particular will be welcome news for investors after it topped consensus. It said shorter queues and more tills open helped boost sales, adding that customer satisfaction was on the rise.
"We also continued to become more competitive and, despite input cost pressures on many commodities, the price of a basket of key Christmas items was the same as last year," the supermarket said.
Morrisons is also ramping up its wholesale activities, saying today that following successful trials, its previously announced tie-up to start supplying McColl's 1,650 stores with Safeway products and national brands, will get underway this month. It will be a rolling programme of around 25 additional stores each week.
Laith Khalaf, senior analyst at Hargreaves Lansdown, said: "The supermarket says it has become more competitive, which in an environment of inflationary pressure means it has likely taken some hit on margins, or passed some pain further up the supply chain, or both. This strategy appears to have borne fruit in the form of volume growth however."
What the company said
Dave Potts, Morrisons' chief executive said:
More and more customers found more things they wanted to buy at competitive prices at Morrisons this Christmas. The hard work and friendliness of our colleagues continues to be key in delivering our strengthening performance, and I would like to thank them for everything they do for our customers.
Our plans to become a broader and stronger business are progressing well, with another period of positive like-for-like sales and the start of the rolling programme to supply McColl's.