Morrison sales in slim rise

Wm Morrison Supermarkets met forecasts with a modest rise in third-quarter underlying sales as the benefits from a small rise in food price inflation were held back by subdued consumer spending.

Britain's fourth-biggest grocer said sales at stores open over a year rose 1.3 per cent, excluding petrol and VAT sales tax, in the 13 weeks to 31 October. That was up from one per cent in the second quarter.

"In a continuing difficult environment for the consumer, performance in the third quarter has been in line with our expectations. Accordingly our financial outlook for the year remains unchanged," the firm said.

Morrison's has outperformed sales growth at bigger rivals Tesco Asda and J Sainsbury in recent years as it recovered from the botched acquisition of Safeway in 2004 and customers responded to its mix of low prices, fresh food counters and innovative promotions.

But it has recently slipped behind Sainsbury, hit by a steeper economic downturn in its heartlands in northern Britain and by a trend towards affordable luxury foods, which has favoured more premium players.

Some analysts are also concerned that Morrison's lacks the diversity of its rivals, although new chief executive Dalton Philips announced plans in September to test convenience stores and selling over the internet next year.