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Morrisons sales fall worsens over Christmas

Mon Jan 7, 2013 2:38am EST

LONDON (Reuters) – Britain’s Wm Morrison Supermarkets (MRW.L) posted a worsening sales fall over Christmas and said although it was disappointed with its performance it would still meet year profit forecasts.

The UK’s fourth-biggest grocer behind market leader Tesco (TSCO.L), Wal-Mart’s Asda WMT.L, and J Sainsbury (SBRY.L), said on Monday sales at stores open over a year, excluding fuel and VAT sales tax, fell 2.5 percent in the six weeks to December 30.

That was worse than a fall of 2.1 percent in its fiscal third quarter and compared with analyst forecasts in a range of down 2-3 percent.

“In a difficult market our sales performance was lower than anticipated,” said Chief Executive Dalton Philips.

“Notwithstanding these difficult market conditions, which we expect to continue through 2013, our sales performance in the period was disappointing,” he said.

Analysts had expected Morrisons to produce the worst performance of the three major British grocers reporting Christmas figures this week, partly reflecting its lack of an online presence and minimal convenience store offer.

Sainsbury’s reports third-quarter sales on Wednesday, while Tesco publishes Christmas figures on Thursday.

Philips said the disappointing performance reflected both the need to improve the firm’s promotional innovation and the communication of its points of difference, which it highlighted in November, as well as the increasing importance of other channels, such as online and convenience, which Morrisons has only recently entered.

The group said the Christmas period had continued to be challenging, with customers shopping to a budget and relying on vouchers.

“Through the self help available to us we have managed our business tightly and accordingly the board believes that our full year performance will be broadly in line with its expectations,” added the firm.

Many of Britain’s store groups are finding the going tough as consumers fret over job security and a squeeze on incomes.

Grocers traditionally cope better in tough economic times thanks to their focus on essential goods but even they are finding growth hard to come by.

Morrisons’ total sales over the six week period fell 0.9 percent. It forecast year end net debt of 2.1-2.2 billion pounds ($3.37-$3.53 billion).

Shares in Morrisons, down 20 percent over the last year, closed Friday at 257 pence, valuing the business at about 6.04 billion pounds. ($1 = 0.6236 British pounds)

(Reporting by James Davey; editing by Kate Holton)

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