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Morrisons suffers 6.3% sales drop

Supermarket chain Morrisons has revealed another big drop in sales as it grapples with an "intense" period of competition in the sector.

The Bradford-based business admitted its recovery will take time after it posted a 6.3% drop in like-for-like sales in the 13 weeks to November 2.

The figure was better than the 7.4% fall reported for the previous six months, while chief executive Dalton Philips said he was encouraged by the progress of initiatives designed to help the chain recapture market share.

As part of a wider plan announced in March to invest £1 billion in price cuts over three years, the c ompany recently launched a new loyalty card scheme which promises to match prices at discounters Aldi and Lidl.

There have been signs that the strategy is starting to pay off after closely watched data from Kantar Worldpanel pointed to an improved sales trend.

Mr Philips said today: "Morrisons is meeting the challenges created by a period of intense industry competition and structural change with quick and decisive action."

Shares in Morrisons surged 7%, although the FTSE 100 stock is still down by a third this year as investors desert the big three listed supermarkets.

The company pointed to an improved trend in its key performance indicators, with the number of items per basket now down 2.4% year-on-year, significantly better than the 6.9% recorded at the start of this year.

Morrisons said an improving IT platform was also enabling it to better understand and serve customers, as well as drive cost out of the business.

Overall, profits for the year to February are now expected to be between £335 million and £365 million, compared with its previous forecast of £325 million to £375 million.

David Alexander, a retail analyst at consultancy Conlumino, is sceptical that Morrisons can successfully reverse the downward sales trend through its current plan of action, such as the Match & More loyalty scheme.

He added: " Far from being a game changer, Morrisons' Match & More scheme misses the point by being precisely the kind of gimmicky, voucher-based operation that caused consumers to cast flirtatious glances at the discounters in the first place.

"Amid all the price-matching and vouchering of the Big Four, the discounters are succeeding by keeping things simple."

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