The shares of Morrisons (LSE: MRW) (NASDAQOTH: MRWSY.US) dived 5% to 244p in early London trade this morning after the UK’s fourth largest supermarket revealed a heavy 5.6% decline in like-for-like sales over Christmas.
Morrisons is trying to turn itself around by building up its network of convenience stores and by launching online grocery deliveries this year. Factoring in the 85 new ‘M Local’ shops opened this year, Morrisons’ total sales fell by 1.9%.
In Morrisons’ traditional stronghold of northern towns and cities, the retailer faces intensifying competition from discount chains, and Walmart-owned ASDA’s value offering.
Morrisons hopes to improve its position by doubling its number of convenience stores this year, geographically focusing on the south-east and London, where the company is currently underrepresented.
As a result of tough trading over Christmas, Morrisons lowered its full-year profit guidance toward £780m.
Chief executive Dalton Philips commented:
“In a very tough market our sales performance over Christmas was disappointing. However we are firmly focused on driving our core business and accelerating our penetration of the fast growing channels. Our convenience business is building towards an operation of scale and the first food deliveries of Morrisons.com will be made tomorrow, reaching half of UK households by the end of the year.”
After its shares declined today, Morrisons is now valued by the market at £5.6bn, and offers a prospective dividend yield of 5.4%.
