UK retailer Morrisons has posted positive like-for-like sales growth of 3.6% in the first quarter of its financial year, with the Bradford-based retailer continuing its upward trajectory under chief executive David Potts.
Here's how leading retail analysts saw the group's performance.
Clive Black, Shore Capital
"Morrisons' Q1 FY2019 trading statement represents a beat to expectations and is the tenth consecutive quarter of positive LFL sales growth, maintaining the ongoing self improvement of the Group.
"Morrison is a Group that is increasingly in control of its own destiny, robustly positioned for any Asda-Sainsbury combination (should it happen), delivering strong annual EPS and DPS growth with the prospect of a recurring 'special', so supporting sustained double-digit shareholder returns."
David Beadle, Moody’s
“Morrisons Q1 sales release reflects continued solid momentum in retail and wholesale like-for-like sales, in line with our expectations. We upgraded the company’s rating to Baa2 stable in January this year in recognition of its positive progress in operational and financial performance.
"With Sainsbury’s not expecting its acquisition of Asda to close for more than a year, our outlook for the credit quality of Morrisons over the next 12 to 18 months remains unchanged.”
Bruno Monteyne, Bernstein Research
"Retail continues to remain strong at Morrisons and we have seen signs of this in strong Kantar data over the past few periods. It has consistently been trading in line with Tesco and ahead of Sainsbury's and Asda. We'd argue that it benefits from the recent Discounter slowdown (Discounter growth near 10 year lows).
"Wholesale contribution to LfL was +1.8%, a larger beat to Consensus at +1.2% This can be attributed to the initiation of the McColl's supply contract. Morrisons reiterate their guidance on Wholesale annualised sales of €700m by the end of 2018. We expect the Wholesale market to continue to consolidate, which provides further growth opportunities for Morrisons.
"We are now open for business as a wholesaler" is a message intended for any business looking to change wholesale supplier in the upcoming consolidation of the wholesale market. We expect capital light wholesale growth to become a bigger component of the Morrisons investment thesis going forward."
© 2018 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: European Supermarket Magazine.
