SHARES in Wm Morrison were down more than three per cent last night after the

supermarket chain reported slower festive sales growth than the previous Christmas, falling short of analysts’ forecasts.

Bradford-based Morrisons, which was the first of the big four grocers to update the City on festive trading, said retail sales grew by just 0.6 per cent in the nine weeks to January 6, on a like-for-like basis. The

performance was well adrift of its showing the previous Christmas, when the chain reported like-for-like growth in retail sales of 2.1% in the 10 weeks to January 7, 2018.

Overall group sales, excluding fuel, at Morrisons were up 3.6% in the nine weeks to January 6, compared with 2.8% last time. The expansion included a like-for-like contribution of 3% from its wholesale division, which supplies groceries to the McColl’s convenience store chain.

Morrisons’ chief executive David Potts said it was the fourth consecutive Christmas of like-for-like sales growth the chain had recorded during its turnaround phase. However the chain, which ramped up its presence in Scotland with its acquisition of Safeway in 2014, acknowledged widespread reports that “there was a change in consumer behaviour during the period”.

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The UK retail sector endured a torrid end to the year, when factors such as the

shift to online sales and flagging consumer confidence saw footfall collapse in November, ahead of the key Black Friday and festive trading periods. Retail mogul Mike Ashley of Sports Direct described

trading conditions in November as the “worst on record”.

However, despite the pressures, figures released by Kantar said it had been a record Christmas for groceries in the UK, with sales at a record £29.3 billion for groceries in the 12 weeks to December 30. However, lower grocery price inflation meant growth was slower overall. Asda came out top among the four biggest groceries with a 0.7 per cent rise in sales. Sainsbury’s, which is seeking regulatory approval for its merger with Asda, was the weakest, with a sales fall of 0.4%. It is o update the City on its festive trading tomorrow.

Morrisons has been slashing prices to combat the rise of the discounters, Aldi and Lidl, and fired its latest salvo on Monday, when it cut the price of more than 900

products by an average of 20 per cent. That was followed yesterday by news that the discounters had recorded their biggest Christmas market share at a combined 12.8%. Figures from Kantar showed Aldi had raised sales by 10.4% and Lidl by 9.4% over the 12 weeks to December 30.

Emma-Lou Montgomery, associate

director at stockbroker Fidelity Personal Investing, said: “Morrisons is playing hard-ball when it comes to giving customers low prices, as it showed with the new year price cuts it implemented ahead of this trading update. But while Morrisons has held its own, with a 3.6% rise in group sales, that’s a far cry from Aldi’s 10% rise and less than the 4.5% it achieved in the first half of the year. Investors will just hope the UK’s fourth-largest supermarket group isn’t leading the charge in a race to the bottom.”

John Moore, senior investment manager at Brewin Dolphin Scotland, noted: “The expectation was this would be a tough festive period for retailers and, by association, for Morrisons; but it has posted a resilient set of figures in a competitive market.”

Morrisons’ chief executive David Potts said: “This is Morrisons’ fourth consecutive Christmas of like-for-like sales growth during the turnaround. Our performance shows colleagues are listening hard and responding to customers, providing consistently great value and good quality when it matters most.”

He added: “Morrisons is well set to keep improving the shopping trip and become more relevant for more customers.”

Shares in Wm Morrison closed down 3.2%, or 7.05p,at 212.6p.