British supermarket group Morrisons' underlying sales growth slowed in its third quarter, reflecting what its new boss said was a "noticeably softer" market.
Former Carrefour France boss Rami Baitieh joined Britain's fifth-largest grocer as CEO in November last year, and in January said its performance was not good enough.
His turnaround strategy has focused on improving Morrisons' price competitiveness, product availability and its 'More Card' loyalty programme. A scheme to price match discounters Aldi and Lidl on key items was introduced in February.
Sales Increase
Morrisons said on Thursday its like-for-like sales, excluding fuel and VAT sales tax, rose 2.9% in the 13 weeks to July 28, having been up 4.1% in its second quarter.
Despite the slowdown, Baitieh said the group made "good headway" in the quarter.
"Like-for-like sales remained positive, the switching data improved year-on-year and although the market was noticeably softer in Q3, our relative position improved and our market share stabilised," he said. Switching data measures customers defecting to other supermarkets.
However, the latest monthly industry data has shown Morrisons still significantly underperforming the sales growth of market leader Tesco and No. 2 Sainsbury's, with Morrisons' market share slightly down on the year at 8.5%.
Morrisons differs from its main rivals in that it also has its own production operations, making half of the fresh food it sells.
Analysts say that since its purchase by private equity firm CD&R, Morrisons has been hamstrung by debt, which was £4.0 billion (€4.8 billion) at the end of the quarter, down from peak of £6.2 billion (€7.44 billion).
Property Deal
Separately on Thursday, Morrisons announced a property deal with net proceeds of £331 million (€397.2 million), which would further reduce leverage.
Morrisons' total sales ex-fuel in the third quarter were £3.88 billion (€4.66 billion), up 2.1%, while underlying earnings before interest, depreciation and amortisation (EBITDA) was £239 million (€286.8 million), up 10.6% on an ex-fuel basis.
It forecast fourth quarter and full year EBITDA would be up year-on-year.
The group also said store workers' pay would increase to £12 (€14.40) an hour from October.
