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Morrisons reports falling sales, but says online is making a contribution

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Morrisons today reported a 3.6% sales drop over the autumn, but said online was making a positive contribution at a time of intense competition and structural change in the industry.

The supermarket, which was the last of the big five supermarkets to introduce an online grocery service that it is still rolling out, said it would take time for the results of its initiatives to be evident in sales figures.

It said total sales fell by 3.6% in the 13 weeks to November 2, with like-for-like sales, which strip out the effect of store openings and closures, down by 6.3%, or 8% including fuel. Online, however, contributed 0.7% growth to the like-for-like figures.

Morrisons is currently pursuing a strategy of cutting prices to match discounters Aldi and Lidl while also investing in multichannel infrastructure, including ecommerce and convenience stores. It is investing in IT in a bid to "better understand and serve customers," while it has opened an online hub in Greater Manchester and will soon start operating its internet service in Merseyside. During the quarter the company opened 12 new M local convenience stores and three new supermarkets.

"Morrisons is meeting the challenges created by a period of intense industry competition and structural change with quick and decisive action," said Dalton Philips, chief executive. "I am encouraged by the further progress we have made, especially on a number of key operational measures, cash flow and costs.

"The launch of the Match & More card was another big move for Morrisons. We are the only supermarket that is price matching the discounters and the successful launch last month was a testament to the positive way our 120,000 colleagues are delivering innovation and embracing the changes at Morrisons.

"We look forward to the key Christmas period focussed on offering customers the best in quality fresh food and value for money that Morrisons is famous for."

Looking ahead, the company said it expected full-year profits to come in at between £335m and £365m, while net debt stood at £2.6bn.

Commenting on the figures, Himanshu Pal, director, retail insights at Kantar Retail, said: "While Morrisons continues to focus on online and convenience expansion, the retailer still lags behind its peers in terms of sheer scale (penetration) and capabilities to become a market leader.

"Despite its clarity on pricing, Morrisons still has the highest number of promotions among the top four grocers. The retailer needs to sustain momentum in improving shopper perception and continue to deliver customer satisfaction."
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