Morrisons has reported a 7.1 per cent drop in like-for-like sales in the 13 weeks to 4 May.
That’s considerably worse than expected – and worse than the 5.6 per cent fall it saw over the festive season. Jefferies had forecast a seven per cent decline, whereas Barclays was predicting one of 6.3 per cent.
Including fuel, like-for-like sales fell 8.2 per cent. Total sales were down 5.6 per cent.
Shares are falling on the news, currently down 1.2 per cent.
Shore Capital has commented on the results this morning, reiterating its sell stance on stock, calling the first quarter trading "dire".
With such weak trading, we cannot yet call whether or not we have come to the end of the downgrade cycle for Morrisons.
The stockbrokers says it’s also unconfident that the “contagion” of gross margin investment made by Morrisons has come to an end. “Until that point it is reached it is equally challenging to be more positive on the group’s shares.”
The supermarket, which is up against rival stores in the battle against discounters, said that it does remain on track to deliver its planned savings target of £1bn, which it announced in March.
While the market remains “challenging”, Morrisons says its financial outlook is unchanged – it expects to deliver underlying profit before tax in the range of £325m – £375m for the full year.
Yesterday, rival Sainsbury’s, despite reporting its smallest growth in 10 years, posted results that were better than expected.
Morrisons announced price cuts on 1,200 products last week, pushing the store into the middle of the first scuffles of the developing price wars.
By the end of this year, the store’s online business will reach up to 50 per cent of UK households, it said, accounting for over £500m of annualised sales, when paired with its convenience stores. It’s on schedule to open 200 new convenience stores by the end of 2014.
On the price cuts made last week, chief executive Dalton Philips commented:
Although it will take time for their full impact to be felt, we are confident that these meaningful and permanent reductions in our prices will enable our clear points of difference to resonate strongly with consumers.