'Disappointing' Christmas delivers sharp sales fall for Morrisons

LONDON Thu Jan 9, 2014 7:57am GMT

A Morrisons supermarket is seen, in west London January 22, 2009. REUTERS/Toby Melville

A Morrisons supermarket is seen, in west London January 22, 2009.

Credit: Reuters/Toby Melville

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LONDON (Reuters) - British grocer WM Morrison posted a sharp fall in like-for-like sales over Christmas, blaming the "disappointing" performance on difficult market conditions, heavy discounting by rivals and the lack of a full online offer.

The UK's fourth largest supermarket chain on Thursday said its like-for-like sales excluding fuel dropped 5.6 percent in the six weeks to January 5. Including fuel, the drop was 7.1 percent.

It said it now expected its full-year underlying profit performance to be towards the bottom of the range of current market expectations, which stand at 783 million-853 million pounds.

Britain's four big supermarket groups are struggling as muted wage growth has kept customers' spending in check, and discounters Aldi and Lidl take an ever greater share of the market.

Leader Tesco reported a 2.4 percent drop in like-for-like sales for the six weeks to January 4 on Thursday, while Sainsbury's managed to eke out a tiny rise in Christmas sales.

Morrisons has also been hampered by its late entry into Internet deliveries and convenience stores, the two fastest growing retail channels for the big grocers.

Chief Executive Dalton Philips said the group was working hard to catch up, with its first online food deliveries starting on Friday.

"In a very tough market our sales performance over Christmas was disappointing. However we are firmly focused on driving our core business and accelerating our penetration of the fast growing channels," he said.

Shares in FTSE 100 company Morrisons closed at 254.2 pence on Wednesday.

(Reporting by Paul Sandle; editing by Kate Holton and Sarah Young)

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