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Morrisons reports another drop in sales

Morrisons reports another drop in sales

Morrisons has reported yet another disappointing set of trading results with the supermarket recording a 6.3 per cent drop in like-for-like sales during the third quarter.

Total sales for the period are down 3.6 per cent, or 5.6 per cent when fuel is factored in, for the 13 weeks to November 2nd. It follows a 7.4 per cent fall in like-for-like sales during the six months to August 3rd and profits are also down by a huge 51 per cent to £181 million. However, despite these results, Morrisons boss Dalton Philips believes the company is on track with its recovery.

The supermarket sector as a whole is under increasing pressure. The traditional big four have been forced into a price war due to the rise of discounters Aldi and Lidl. Both of these retailers have been gaining market share as consumers favour them over the more established names in the market.

In a bid to tackle the impact of Aldi and Lidl, Sainsbury's has teamed up with Scandinavian retail group Dansk Supermarked to relaunch Netto in the UK. The first outlet opened in Leeds yesterday (November 6th) and more are planned for the north of England. If successful, they will be rolled out across the rest of the UK.

Morrisons itself has launched its Match and More campaign. The initiative not only promises to beat like-for-like prices from competitors such as Tesco, Asda and Sainsbury's but also Aldi and Lidl. The loyalty card, launched in October, has been described by Mr Dalton as a "big move" and "extremely popular" with customers.

However, the latest financial results of Morrisons have sent alarm bells ringing with City analysts describing the trading update as "dismal".

Shore Capital analysts Clive Black and Darren Shirley said: "It is essential that the group trades much more robustly in the current quarter and then displays more evidence than it is currently showing that its trading strategy is striking a much stronger chord with British shoppers."


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