Sales at Morrisons rose for the first time in almost 18 months as a recovery at market leader Tesco stalled, according to UK grocery industry figures released on Tuesday 2 June.
Morrisons’ sales rose 0.1 per cent in the 12 weeks through 24 May, researcher Kantar Worldpanel said in its monthly report, providing a boost to new chief executive officer David Potts. Tesco sales in the same period fell 1.3 per cent.
Since taking the job in March, Potts has focused on improving standards in Morrisons’ stores to regain customers who deserted the grocer amid a price war between discounters and mainstream chains.
Tesco CEO Dave Lewis has also been working on a turnaround since his appointment last year, though the latest figures indicate the revival may be slowing.
Price cuts that reduce the value of sales are fuelling Tesco’s market-share losses, Bruno Monteyne, an analyst at Sanford C. Bernstein, said by phone. The UK’s largest grocer is doing the “right things for the long term”, he said.
Morrisons rose 0.8 per cent to 170.7 pence, putting the stock among the best performers in the benchmark FTSE 100 Index ahead of a quarterly review of the index’s constituents after the close of trading Tuesday. With its market value having fallen below £4 billion ($6.1 billion) this year, the retailer has the lowest market value of any index member.
Kantar’s report also showed revenue continuing to decline at Sainsbury's and Asda, while rising at German discounters Aldi and Lidl.
Sainsbury's sales fell 0.3 per cent in the 12 weeks, with Asda showing a 2.4-per-cent decline, the researcher said.
Growth rates at Aldi and Lidl improved after slowing in the prior 12-week period. Aldi sales rose 16 per cent, giving the chain a 5.4-per-cent share of the market, while Lidl’s sales increased by 8.8 per cent.
Downward pressure on UK grocery pricing abated slightly, as the rate of deflation slowed to 1.9 per cent from 2.1 per cent a month ago, ending a streak of worsening price movements dating back to October 2013.
Bloomberg News, edited by ESM
