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Last Updated: Tuesday, 11 January, 2005, 16:46 GMT
Morrisons has downbeat Christmas
Morrisons store
Morrisons says it is on target for its financial year
Shares in supermarket chain Morrisons have fallen 5.6% after the company reported flat Christmas sales.

Like-for-like sales rose by just 0.1% in the six weeks to 9 January. Growth was 4% when petrol sales are included.

Including new stores and Safeway conversions to the Morrisons brand, sales rose 31.9% - or 39% with fuel.

The firm said it was on target to meet profit expectations for the year to 30 January, and achieve growth forecasts for Morrisons-branded stores.

Shares in Morrisons closed down 12 pence at 203.5p.

Below expectations

"These results are not surprising, but it is disappointing that the main chain is only up 0.1% if you exclude petrol, and trading at its Safeway stores is poor," said Richard Ratner, retail analyst at Seymour Pierce.

Rhys Williams, also of Seymour Pierce, added: "They [Morrisons] give a host of reasons for this performance, but to be quite frank, it is still well below expectations.

"Asda and Tesco will certainly be well above 0.1%."

Sainsbury's gives an update on Thursday and Tesco next Tuesday.

Morrisons said Christmas sales had been hit by a combination of factors, including competitors both opening new stores and aggressively using special offer coupons at former Safeway stores that it was forced to sell.

The conversion programme seems to be working with sales per square foot up but there is still a lot more to do
Rhys Williams, Seymour Pierce

However, it said that after Christmas there was "minimal carry over of seasonal stocks particularly when compared with the residues experienced by Safeway 12 months ago."

The supermarket chain also benefited from being the first to announce it would cut petrol prices to below 80p a litre in December last year, following a drop in the oil price.

Continuing conversions

It said it believed its performance was acceptable and pointed out that the 56 stores it had converted to Morrisons had higher sales per square foot than stores still trading under the Safeway name.

Safeway store
Morrisons has a bigger presence in England since buying Safeway

Former Safeway stores now branded Morrisons are selling between 41% and 58% more per square foot, depending on their size, than those still branded Safeway.

"The conversion programme seems to be working with sales per square foot up but there is still a lot more to do," said Mr Williams.

For the 49 weeks to January 9, like-for-like sales at Morrisons stores were up 5% (7.4% including fuel), while outlets still badged Safeway are trading 9.1% down (down 7.1% including fuel). Converted Safeway stores are down 3.2% (or just 0.7% including fuel).

Morrisons plans to convert a further 180 of the Safeway stores it bought last year.

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