Shares in Morrisons (LSE: MRW) lost 5p to 186p after the market opened for business this morning, after the Bradford-based grocer reported a 7.1% fall in quarterly like-for-like sales.
Total sales, excluding fuel, fell 4.2% to compared to 2.8% last year. This was worse than analysts had expected.
Morrisons said its underlying profit forecast for the full year — in the range of £325m-£375m — remains unchanged.
Morrisons unveiled 1,200 price cuts last week to emphasise the firm’s credentials as a “value-led grocer”. The price cuts include minced beef (£2.49 to £1.99) and ripened tomatoes (£1.69 to 99p).
The chief executive, Dalton Philips, is bullish on the strategy:
“The plans we set out at our results in March are on track. The reaction of our customers to the 1,200 “I’m Cheaper” price cuts we announced last week has been very positive. Although it will take time for their full impact to be felt, we are confident that these meaningful and permanent reductions in our prices will enable our clear points of difference to resonate strongly with consumers.”
Analysts expect Morrisons will pay a full year dividend of 13.6p in 2015. The dividend is covered 1.06 times by earnings and, at today’s share price, investors can secure a yield of 7.3%.
Of course, the decision to ‘buy’ — based on those metrics, today’s results and the wider prospects for the grocery sector — remains your decision.
