Supermarket Morrisons has rung up a better-than-expected 3.6% hike in sales thanks to a resilient performance in stores and its burgeoning wholesale arm.
The UK’s fourth biggest grocery chain notched up its 10th quarter in a row of rising group like-for-like sales and defied expectations of a slowdown in growth after the sector was battered by the Beast from the East cold snap earlier this year.
But it remained tight-lipped in the first quarter update on the £12 billion merger of rivals Sainsbury’s and Asda, which will spark one of the biggest shake-ups in the supermarket sector since Morrisons itself took over Safeway 14 years ago.
The tie-up will create a supermarket titan bigger than Tesco with revenues of £51 billion and a network of 2,800 Sainsbury’s, Asda and Argos stores.
In its update, Morrisons said supermarket and online sales growth eased slightly to 1.8% in the 13 weeks to May 6, down from 2% in the previous three months, but this was still better than forecast.
The group said it was “now open for business as a wholesaler”, with the division largely behind the impressive performance, with sales up 1.8% – a surge from the 0.8% seen in the previous three months.
Chief executive David Potts said: “We are pleased to have made a strong start to the year, again becoming more competitive for customers while delivering growth on growth.
“We expect to continue to improve in the year ahead.”
Shares lifted 2% after the update.
Analysts have praised the turnaround plan being led by Mr Potts, including his recent launch of the cut-price Wonky vegetable range and wholesale push through deals such as that with McColl’s.
Morrisons held on to its market share at 10.5% in the most recent industry data from Kantar Worldpanel, while Tesco remained at 27.6%, and Sainsbury’s and Asda both lost ground at 15.9% and 15.5% respectively.