Halloween sales help Morrisons beat forecasts

David Potts is steering Morrisons back to health

The Bradford-based grocer beat analysts' forecasts with a 1.6 per cent rise in third quarter like-for-like sales over the 13 weeks to October 30.

Analysts had pencilled in growth of 1.0 to 1.5 per cent, lower than the 2.0 per cent increase seen in the second quarter.

The turnaround is credited to former Tesco executive David Potts, who joined Morrisons as chief executive in March 2015 with a remit to revive the group after it was hammered by the rapid rise of discounters Aldi and Lidl in its northern heartland.

Mr Potts has assembled a new top management team and has reversed Morrisons' customer drain by cutting prices, improving product quality and availability and boosting store standards and customer service.

"We will keep investing in becoming more competitive and improving the shopping trip, and I am confident we will serve our customers even better during the important trading period ahead," he said.

Mr Potts has also strengthened Morrisons' online strategy through a renegotiated agreement with distributor Ocado and a wholesale supply deal with Amazon.

Analysts forecast that Morrisons will achieve a 2016-17 underlying pre-tax profit of £321m, up from £302m in 2015-16.

Morrisons said part of its success was due to its biggest ever Halloween when turnover rose by 20 per cent.

Mr Potts said: "Our like-for-like sales have now been positive for a year, which is thanks to the hard work and dedication of the whole Morrisons team. There is a lot more we plan to do. "

Morrisons flagged that food prices continued to fall during the quarter, with deflation of 1 per cent.

All of the big four supermarkets - Tesco, Asda, Sainsbury's and Morrisons - have been cutting prices in a bid to better compete with German discounters Aldi and Lidl, which have eroded their market share.

John Ibbotson, director of the retail consultancy Retail Vision, said: “Four straight quarters of rising like-for-like sales is no blip, and the once flailing brand has definitively turned the corner with these expectation-beating results.

“CEO David Potts’ back to retail basics approach – in which stores have been spruced up, with more local ranges and lower prices introduced – is beginning to pay dividends and tempt back shoppers.

“His ruthless decision to close 30 stores and sell Morrisons’ underperforming convenience chain has stopped the rot. The reduction in capital expenditure and paying down of debt is steadily restoring the balance sheet to health."