Giant supermarket happy with returning to the usual holiday fare

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Via Scott Wright

Over the Christmas and New Year era, grocery giant WM Morrison posted strong business, fuelled by the enjoyment of traditional festive fare.

In the 22 weeks ended Jan. 3, Morrisons, the first of the major supermarkets to announce its holiday season business figures, saw like-for-like sales (excluding fuel) increase 9.3 percent.

That leaves the retailer on track to report adjusted full-year profits in the range of £ 420 million to £ 440 million, in line with previous guidance, before a £ 230 million refund to the taxpayer.

The update from Morrisons came as retail analyst Kantar revealed that December 2020 was the UK’s busiest month on record. Supermarkets, with clients spending £ 11.7 billion in the last four weeks on takeaway food.

As retail sales rose 8.1 percent in the 22 weeks to January 3, Morrisons highlighted a “renewed focus on Christmas trading” Like-for-like retail sales rose 7.2 percent in the era and 7.3 percent in the fourth quarter in the nine weeks to date. The supermarket pointed out that limitations on Covid, which made it more difficult for larger meetings with family and friends, had influenced shopping patterns and customer behaviour, and said Champagne sales were up 64 percent year on year. Salmon sales were up 40%, while Free From mince pies were up 14%.

Morrisons pointed out that in the two weeks leading up to Christmas, its new doorstep delivery service had handled more than 35,000 orders, with vulnerable, elderly and lonely individuals especially using the service.

The business also highlighted the growth of its online operations, which, relative to those of other major supermarkets, are still in their infancy. Morrisons announced that in the fourth quarter, revenue tripled across all online platforms, including Morrisons.com and Morrisons at Amazon.

In the 22 weeks ended Jan. 3, the wholesale division of the group, which supplies McColl’s convenience stores and other outlets, contributed 0.9% of the 9.3% rise in like-for-like revenue.

Yesterday, the company revealed that it now expects Covid’s full-year direct costs of £ 280 million, with a further £ 10 million to be incurred before the end of the year.

Sophie Lund-Yates, Hargreaves Lansdown’s equity analyst, said:’ The Christmas get-together may have turned out to be smaller, but that didn’t stop us from making the most of the festive season. Over Christmas this year, champagne and salmon sales swam dramatically upstream, benefiting businesses like Morrison’s post-healthy sales figures. However, more significant than the ringing of the cash registers is the mention of improved consumer and brand metrics by the group. This is a huge achievement for the supermarket chain in the intensely competitive environment of the Big Four.

Ms. Lund-Yates added: “In some respects, Morrisons is an underdog, particularly when you consider its online business, which is smaller than some of its competitors.” The pandemic has given the group a chance to fix that, and so far this quarter, digital revenues have more than tripled.

“The question now is whether Morrisons can keep a firm grip on this momentum and drive growth long and hard enough to give its rivals cause for concern.”

In the meantime, Kantar said the shift in phase constraints, Brexit talks and Dover delay reports prompted the U.K. Consumers should do their Christmas shopping sooner, with the busiest day being Dec. 21. Dec. 21 was the busiest day for sales. The company characterized the celebrations as “low-key but still jolly” and estimated that families purchased turkeys and Christmas puddings similar to last year, while cheese sales increased by 17 percent and chilled desserts by 15 percent. In December, online grocery purchases accounted for 12.6 percent of overall spending, compared to 7.4 percent in 2019, said Kantar.

At 179.85 pence, Morrisons’ shares closed down 1.25 pence.

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