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How the fortunes of Morrisons and Aldi contrasted this Christmas

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How the fortunes of Morrisons and Aldi contrasted this Christmas

Morrisons today reported falling sales over the “unusually challenging” autumn and Christmas period. That contrasts with a rise in sales reported this week by discount retailer Aldi.

 

Morrisons sees sales fall amid customer uncertainty

Morrisons, a Top50 retailer in IRUK Top500 research, said it had focused on its customers at a time of continuing customer uncertainty, offering a competitive range of Christmas food.

 

But total sales fell by 1.8% excluding fuel in the first 22 weeks of its financial year – to January 5 – and by 1.3% in the third quarter – to November 3.

 

On a like-for-like basis, which strips out the effect of store – and business – openings and closures, sales excluding fuel fell both in the 22 weeks to January 5 (LFL - 1.7%) and in the third quarter, between August 5 and November 3 (LFL - 1.2%). Wholesale stayed relatively steady while retail sales fell. Over the 22 weeks, wholesale stayed flat while retail sales were down by 1.7%, and over the third quarter retail sales fell by 1.1% while wholesale was down by 0.1%.

 

The grocer’s strategy includes an ambition to turn over £1bn from wholesale, working with customers from Amazon to McColl’s. Today it said that while its wholesale business grew with most of its customers, sales were lower at McColl’s in the period to November 24. The first 10 McColl’s stores to become Morrisons Daily convenience stores had, however, seen strong sales and this pilot is to continue with a further 20 stores expected to be converted in January and February.

 

Morrisons chief executive David Potts said: “It was encouraging that during an unusually challenging period for sales, our execution was strong and our profitability robust, demonstrating the broad-based progress we have made during the turnaround. This was again down to the hard work of Morrisons’ exceptional team of food makers and shopkeepers. As always, we will take some learnings into the new year and look forward to 2020 with a strong plan and solid foundations on which to continue to grow.

 

“We managed costs well throughout the period, offsetting some of the impact on LFL sales of the challenging trading conditions and continued uncertainty amongst customers. With four weeks of the year still to go, we expect 2019/20 profit before tax and exceptionally to be within the current range of analysts’ forecasts.”

 

Aldi benefits as shoppers turn to it for lower prices

Aldi, meanwhile, saw its sales boosted in the run-up to Christmas.

 

Sales at the discount grocer, ranked Top500 in IRUK Top500 research. grew by 7.9% in the four weeks to Christmas Eve, reaching more than £1bn for the first time. Beers, wines, spirits and premium products helped to drive growth.

 

Giles Hurley, chief executive of Aldi UK, said: “More customers than ever before shopped with us this Christmas because they knew Aldi offered unbeatable value on premium products and the lowest prices on festive essentials.

 

“Although we saw strong growth across all key categories, sales of our premium Specially Selected range surpassed expectations, as customers snapped up these products for a fraction of the price they would have paid elsewhere.”

 

Aldi currently has 874 stores in the UK and aims to have 1,200 by 2025.

 

Image: InternetRetailing Media/Paul Skeldon

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