Jan 8, 2019

Sainsbury’s-Asda deal could help Morrisons out of a tight spot

News of a mere 0.6 per cent rise in Morrisons' like-for-like retail sales, and a 3 per cent increase in wholesale trade, was met with a 3.5 per cent share price fall - even though this represented a fourth consecutive Christmas of growth. When the discount chain revealed double-digit growth at the start of the week, Morrisons responded by saying it would cut the price of 900 products by about 20 per cent. Some 24 hours later, its sub-1 per cent retail growth suggested the price cuts were a defensive move to stem loss of market share - hence the share price fall. Data from Kantar then confirmed it: over the 12 weeks to December 30, UK supermarket sales were up 1.6 per cent in aggregate, meaning Morrisons' market share actually declined by 20 basis points to 10.6 per cent. On Tuesday, the 2,800-strong pub chain reported an 11 per cent rise in Christmas like-for-like sales.

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