Morrisons’ sales growth slows as market softens

The boss of Wm Morrison has blamed a “noticeably softer” market for a slowdown in sales in the third quarter.
Like-for-like sales at Britain’s fifth largest supermarket, excluding fuel and VAT sales tax, rose by 2.9 per cent in the 13 weeks to July 28, having increased by 4.1 per cent in the previous quarter.
The stunted sales growth delivers a fresh blow to the private equity-owned grocer, which has been undergoing a turnaround under Rami Baitiéh, its chief executive.
The chain, which has about 500 supermarkets and some convenience stores, has struggled since it was bought by Clayton Dubilier & Rice, the American private equity group, in 2021 in a deal that added £6.6 billion of debt to its balance sheet. The Bradford-based company’s share of the grocery market had declined as shoppers have turned towards its discounter rivals, with Aldi overtaking it as Britain’s fourth biggest grocer.
Morrisons’ market share has stabilised in the past year since the arrival of Baitiéh, 53, in November. He has focused on improving Morrisons’ price competitiveness, product availability and its More Card loyalty programme. In the latest figures from Kantar, the retail sector data provider, the group’s share stood at 8.5 per cent, down by only 0.1 percentage points on a year before.
“Our focus on listening to customers, better availability and improving the Morrisons More Card has driven another quarter of good headway across the board,” Baitiéh said. “Like-for-like sales remained positive, the switching data improved year-on-year and although the market was noticeably softer in [the third quarter], our relative position improved and our market share stabilised.”
• Struggling Morrisons hit by staff exodus
In his first interview since taking the job, Baitiéh said that he would reintroduce Saturday work calls for his leadership team if market share dropped again. “You have to earn it. If we come back to losing market share, we’ll bring back Saturday calls.” The boss introduced virtual meetings with his top 150 senior leaders every evening, Monday to Saturday, in an effort to improve company performance. However, he rowed back on Saturday calls after complaints from employees.
Morrisons has been reducing its debts with a series of asset sales, including the sale of its petrol forecourts business to Motor Fuel Group for £2.5 billion, in return for a 20 per cent stake in the service stations operator. Motor Fuel Group is also owned by Clayton Dubilier & Rice.
Sky News reported this week that Morrisons had raised £331 million through the sale of ground leases on 76 supermarkets.
Jo Goff, its chief financial officer, said that “if the proceeds from the transaction were used to reduce debt, on a pro-forma basis, our debt would be £3.6 billion, down 41 per cent from its peak”.
Since its private equity takeover, there has been speculation about whether the company will sell off its prized manufacturing business. Morrisons processes and packs much of the meat, fish and vegetables it sells. It owns and operates 17 food manufacturing sites, including abattoirs, egg-packing houses and fish-processing plants. Baitiéh said he had no plans to sell off those assets.