Today I’m running the rule over two fallen FTSE 100 giants.

Give groggy grocer a wide berth

Much-maligned supermarket giant Morrisons (LSE: MRW) cheered the market with rare positive trading results last week, giving investors renewed hope of a long-awaited turnaround.

The Bradford chain advised that like-for-like sales crept up 0.2% in the nine weeks to 3 January. Although these results can hardly be considered rip-roaring, Morrisons’ first such sales advance for more than a year is certainly worthy of celebration.

And hopes of a prolonged uptick at Morrisons would have been given further fuel by positive sales numbers from fellow mid-tier operator Tesco. The business advised that its own underlying sales nudged 1.3% higher in the six weeks to 9 January.

But the introduction of further discounting at both chains was responsible for giving till activity a strong boot in the right direction, a strategy that is helping sales at the expense of the bottom line.

On top of this, poor retail numbers at both Sainsbury’s and Asda over the festive period suggest that the mid-tier grocers are still struggling to hold their ground against discount retailers Aldi and Lidl, both in-store and online, not to mention premium chains like Waitrose.

Morrisons’ decision to shutter its Westgate store in Bradford (its only shop in the centre of its home city) is a depressing metaphor for the company’s ongoing troubles. Sure, the move to close the underperforming outlet along with six others is undoubtedly a step in the right direction. But earnings aren’t going to recover until revenues improve without the aid of crippling price cuts.

The City expects Morrisons to chalk up a 16% earnings decline in the year to January 2016, the third decline on the spin if realised. The business has consistently failed to gets its transformation plan firing despite scores of token initiatives and even personnel changes at the top.

And with its competitors steadily expanding I believe much further pain is in store for Morrisons.

Catalogue play under the cosh

The newsflow surrounding Home Retail Group (LSE: HOME) has been dominated by the recent £1bn takeover attempt launched by Sainsbury’s. Indeed, the stock has seen its share price shoot 54% higher since the supermarket confirmed it had made an approach to hoover up the Homebase and Argos owner.

Although Home Retail Group had rebuffed the approach made back in November as it “undervalued” the business, not to mention its long-term growth potential, the sale of its Homebase outlets to Australia’s Wesfarmers on Monday is said to clear the path for a fresh buyout bid in the weeks ahead.

But whether or not Sainsbury’s elects to snap up the Argos operator, I believe Home Retail Group remains in severe peril as competitive pressures increase. Like-for-like sales at its catalogue business fell 2.2% during the 18 weeks to 2 January, the firm advised last week.

The City has pencilled in a 23% dip for the year to February 2016, a third annual dip out of five if realised. And like Morrisons, I don’t expect the bottom line to improve any time soon thanks to the impact of profit-crushing discounts.

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Royston Wild has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.