UK retailer Morrisons has posted a 2.9% increase in sales in over the Christmas period, which chief executive David Potts has described as "very encouraging". Here's how the analysts saw it.
David Beadle, Vice President – Senior Credit Officer at Moody’s:
“Morrison’s ongoing revenue momentum, with accelerating positive like-for-like sales growth detailed in their Christmas trading statement published today, is credit positive. Importantly, the strong top-line performance is being achieved alongside ongoing cost savings. As such, the company are guiding for full year profits to be slightly ahead of previous market expectations. The company’s improving credit metrics, which are also positively impacted by working capital efficiencies and disposals of surplus property, leave Morrison’s comfortably positioned in its Baa3 rating category at this time.”
Ray Gaul, VP Research & Analytics, Kantar Retail:
"Wm Morrison Supermarkets plc’s investments in better products, better services, and more efficient ways of working have delivered results in a tightly contested Christmas Trading period. […] With Morrisons having met most of their investor targets for the 2016/2017 trading period and showing very positive momentum, Morrisons’ staff will have plenty to celebrate and will enter the upcoming year with plenty of enthusiasm."
Tom Berry, Analyst, Verdict Retail:
"In a retail market typically slow with the uptake of available technology, Morrisons has shown its aptitude to modernise through the use of a cloud-based automated ordering system, focussed on its grocery and fresh categories. Utilising historic transactional data to automatically forecast and order stock replenishments significantly improved availability during the busy Christmas period, improving the consumer experience. […] As l-f-l items per basket continue to fall (-5.3% over Christmas period), it is essential for Morrisons to continue investment in product quality, encouraging consumers to purchase higher priced goods."
Bruno Monteyne, Bernstein Research:
"This strong result from MRW reflects good execution by Morrisons as customers lost over the past few years come back to stores. We also expect it to reflect an overall strong Christmas by UK food retailers with this result boding well for Sainsbury's and Tesco results later this week."
Barclays European Food Retail Equity Research:
"Morrison reported a LFL sales (ex-fuel) increase of +2.9% in the nine weeks to 1 January, the strongest performance for seven years. […] This beat seems to have been driven by especially strong LFL transaction growth of +5.2% in the period, compared with +4.1% in 3Q. The company also states that it is rolling out its automated ordering system in several categories – this brings risk but seems to be going well and could unlock savings."
© 2017 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. To subscribe to ESM: The European Supermarket Magazine, click here.
