Britain’s Morrisons reported another big decline in its quarterly sales as consumers preferred either to save from discount stores and chains or pay more for high-class treats; however, the company said its aim to respond towards the shifting industry trends is working.
Though wages are stationary, discounters are flourishing and nearly all Britain’s grocers have been responding by slicing prices, hitting profits. On Thursday, Sainsbury disclosed a new tactic in the playing field so as to regain thrifty shoppers, launching a discounted store with Netto, a Danish firm.
Some families are spending more in stores like the Aldi, Lidl, including Marks & Spencer, which reported its 20th straight rise in quarterly sales on Wednesday. Thus, such changes in spending habits have hurt mid-range stores the hardest.
A Conlumino analyst said Morrisons continually manifests battle scars, caused by structural changes in the ongoing grocery market.
On Thursday, the company posted a 6.3% drop in sales at Morrisons stores that are operating for more than a year, except fuel for the third quarter, steeper than the analysts’ estimates of 5.2%, while a 7.6% decline in the second quarter.
The company shares jumped 9.3%, despite the 42% decline last year. The company said the quantity shoppers are buying show improvement, thus, expressing confidence for its 2014-2015 profit outlook, along with a detailed progress in reducing its debt.