Wm. Morrison Supermarkets plc (LON: MRW) announces poor sales over Christmas.
Wm Morrison Supermarkets (LSE: MRW) revealed poor sales in its Christmas trading update this morning, an announcement that many investors had predicted.
Excluding fuel, total sales declined by 0.9% and like-for-like sales dropped off 2.5% in the six weeks to 30 December 2012. Management acknowledged the disappointing sales performance, "notwithstanding these difficult market conditions".
Morrisons' financial position remains strong, with full-year net debt expected to be in the range of £2.1-2.2bn. In addition, its two-year programme to retire £1 billion of equity is described as "well advanced".
Blame was attributed to a market where consumers are increasingly tightening their belts, shopping to a budget and using vouchers and coupons to offset their food shopping's expense.
Chief executive officer Dalton Philips commented:
"Our 130,000 colleagues have done an outstanding job serving our customers great value food this Christmas and I would like to thank them for their dedication and hard work. In a difficult market our sales performance was lower than anticipated, but we have a strong business and significant opportunities to advance our strategy, as we accelerate our multi-channel offer".
The trading statement confirmed the supermarket's intention to improve its promotional innovation, highlighting its qualities compared to its rivals. Elsewhere, Morrisons will continue to focus on its relatively recent entry to other channels, including its online presence and the introduction of 'M' convenience stores, an area where Tesco and J Sainsbury have reaped rewards in the past.
Interestingly, today also brought us news Morrisons' share buyback programme acquired 329m shares at a cost of £931m. However, this puts the average price at 283p -- whereas the shares previously closed at 257p prior to this morning...
Whether you have faith in the company's management to turn the supermarket around and achieve success in 2013 and beyond is a subjective decision. The share price remained largely unmoved at the time of writing, while Morrisons currently offers a healthy yield of 4.6%, paying a 10.7p dividend per share last year and has promised a 10% raise this year. Its rivals' results out later this week will make for an interesting comparison, and shed more light on how the sector is faring.
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> Sam does not own shares in any of the companies mentioned. The Motley Fool owns shares in Tesco.