Supermarket giant savours return to traditional festive fare

Morrisons, the first of the major supermarkets to reveal festive trading figures, posted a 9.3 per cent rise in like-for-like sales, excluding fuel, for the 22 weeks ending January 3.

It keeps the retailer on track to achieve underlying profits in the range of £420 million to £440m for the full year, prior to the return of £230m of business rates relief to the taxpayer, in line with previous guidance.

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The update from Morrisons came as Kantar, the retail analyst, reported that December 2020 had been the busiest month on record for British supermarkets, with shoppers spending £11.7 billion on take-home groceries over the last four weeks.

Morrisons highlighted a “renewed focus on Christmas fare” as retail sales drove an 8.1% increase in sales for the 22 weeks to January 3. Like-for-like retail sales rose 7.2% over that period, and by 7.3% over the nine weeks of the fourth quarter to date. Noting there had been an impact on shopping patterns and customer behaviour because of Covid-restrictions, which made larger gatherings of family and friends more difficult, the supermarket said Champagne sales were up 64% on the year before. Sales of salmon were up 40%, while Free From mince pies climbed 14%.

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Morrisons flagged that its new doorstep delivery service had completed more than 35,000 orders in the two weeks before Christmas, with vulnerable people, the elderly and those isolating among those using the service.

And it highlighted the growth of its online operation, still in relative infancy compared with those of other major supermarkets. Morrisons reported that sales have tripled across all online channels, including Morrisons.com and Morrisons at Amazon, in the fourth quarter to date.

Meanwhile, the company’s wholesale division, which supplies McColl’s convenience stores and other channels, contributed 0.9% to the 9.3% rise in like-for-like sales in the 22 weeks to January 3.

The company flagged yesterday that it now expects direct Covid costs for the full year to be £280m, with a further £10m to be incurred before year-end.

Sophie Lund-Yates, equity analyst at Hargreaves Lansdown, said: “Christmas get togethers may have been smaller, but that didn’t stop us making the most of festivities. Sales of Champagne and salmon swam decidedly upstream over Christmas this year, helping the likes of Morrison’s record some healthy sales figures. More important than the ringing of the tills though, is the group’s mention of improving customer and brand metrics. In the highly competitive realm of the Big Four, this is a significant milestone for the supermarket chain.”

Ms Lund-Yates added: “Morrisons is an underdog in some ways, especially when looking at the online business, which is smaller than some rivals. The pandemic has given the group a chance to address this, and digital sales have more than tripled so far this quarter.

"Starting from a lower base means there’s more room for exceptional growth, but the question now is if Morrisons can keep a firm grasp on that momentum, and push growth long and hard enough to give its competitors something to worry about.”

Kantar, meantime, said changing tier restrictions, Brexit negotiations and reports of delays at Dover led British consumers to shop for Christmas groceries earlier, with December 21 the busiest day. Describing the celebrations as “pared back but still merry”, it reported that families bought a similar number of turkeys and Christmas puddings as last year, though cheese sales were up 17% and chilled desserts by 15%. Online grocery sales accounted for 12.6% in total spend in December, compared with 7.4% in 2019, Kantar said.

Shares in Morrisons closed down 1.25p at 179.85p.