Minggu, 29 April 2012

Gloom expected for Morrisons as grocer feels pain of fierce competition

Gloom expected for Morrisons as grocer feels pain of fierce competition

By Rupert Steiner

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The huge growth spurt at Morrisons looks to have slowed with the supermarket giant expected to post its first fall in sales since 2004.

The Bradford-based grocer, which was previously one of the best performing supermarkets, is likely to join Tesco in posting negative underlying sales growth, which analysts expect to be -1 per cent for the first quarter.

Morrisons will have felt some pain from the fierce competition sweeping the industry in which shoppers have flocked to rivals offering the lowest discount.

Woes: Morrisons is expected to join Tesco in reporting negative underlying sales growth

Woes: Morrisons is expected to join Tesco in reporting negative underlying sales growth

But Britain’s fourth-largest supermarket chain will say that the figures for this quarter are being compared with the previous year’s, which were flattered by sales from the Royal Wedding and the ten-day holiday period.

Some analysts think Morrisons has been suffering from its exposure to the north of the UK and has not been putting on enough promotions.

It runs regular offers but is not expected to enter the fight with a fresh price-cutting drive.

Instead, it will say it has been focusing on revamping its own label ranges, which have become increasingly important since the recession as shoppers look to save money by switching away from more expensive big-named brands.

James Grzinic, an analyst at broker Jefferies, said: ‘We await confirmation that the continued roll-out of the new fresh format to a greater number of large stores is producing the required sales.’

Separately, Argos-owner Home Retail Group is expected to post a 60 per cent slide in annual profits to £100million.

This could result in pressure being heaped on chief executive Terry Duddy to shrink the 748-store network.

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