Morrisons drops commercial head as sales fall faster

LONDON Thu Nov 8, 2012 11:45am GMT

A sign is seen outside a Morrisons supermarket, in south London September 9, 2010. REUTERS/Andrew Winning

A sign is seen outside a Morrisons supermarket, in south London September 9, 2010.

Credit: Reuters/Andrew Winning

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LONDON (Reuters) - Britain's No. 4 grocer Wm Morrison (MRW.L) posted a worsening sales decline and parted company with its commercial director, saying it had failed to get its selling points across to consumers.

The loss of another senior executive comes as Morrisons misses out on the sales growth of its three big rivals, Tesco (TSCO.L), Asda (WMT.N) and Sainsbury (SBRY.L), as well as smaller players such as Aldi and Lidl.

The Bradford, northern England-based firm said on Thursday that Richard Hodgson, recruited for the commercial role from Waitrose JLP.UL two years ago, would leave immediately.

Martyn Jones, corporate services director, has been appointed interim commercial director of the more than 450 stores group pending the recruitment of a successor for Hodgson.

Hogdson's exit follows that of marketing and operations director Richard Lancaster who left in April. In June Morrisons said finance director Richard Pennycook will leave the business next June after eight years at the firm.

Chief Executive Dalton Philips said Morrisons had to do a better job of telling customers about policies such as its emphasis on in-store butchers, bakers, fishmongers, cheesemongers and greengrocers and its focus on producing much of the food it sells.

"I don't see us stepping up further our promotional campaign, I see us stepping up further the communication of why we are so different from the rest of the pack. I don't believe that we've been getting that message over strongly enough," he told reporters.

Total third quarter sales, excluding fuel, fell 0.4 percent, though this is partly explained by Morrisons' lower level of store openings compared to rivals as well as its lack of an online food outlet and a significant convenience business.

Shares in Morrisons, down 14 percent over the last year, were down 1 percent at 265 pence at 1011 GMT, valuing the business at 6.3 billion pounds.

"We think the relatively slow rollout of new format stores and online are red herrings. Morrisons is underperforming because it needs to do its day job better," said Panmure analyst Philip Dorgan, who sees downside to consensus profit forecasts.

CUTTING BACK

Sales at stores open over a year, excluding fuel, fell 2.1 percent in the 13 weeks to October 28, the firm's third quarter.

That compares with analyst forecasts of a decline of 2 percent, according to a company poll, and is weaker than the 0.9 percent fall in the first half.

Though sales were lower than anticipated, Morrisons said it anticipated a full year performance "broadly in line" with its expectations, helped by productivity improvements.

Though the UK is out of recession, many retailers are still struggling as consumers are deterred by inflation, meagre wage increases and government measures designed to cut national debt. Last week electricals retailer Comet collapsed into administration, threatening 6,600 jobs.

On Tuesday an industry survey said British retail sales slowed sharply in October, while bellwether British retailer Marks & Spencer (MKS.L) posted a 3 percent fall in first half profit.

"A third of the families that we talked to said they would be consciously cutting back on (Christmas) presents this year," said Philips.

Consumers would be even more cost-conscious this Christmas than in 2011, he said, and Morrisons would offer to feed a family of eight for Christmas dinner "with all the trimmings" for 2.49 pounds a head, down 15 percent on last year.

(Reporting by James Davey; Editing by Ruth Pitchford)

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