Morrisons Q2 sales drop amid ‘fragile and difficult’ trading environment

Morrisons sales have dropped by 6.4% year-on-year for the second quarter, amid what the supermarket giant has described as a “very fragile and difficult consumer environment”.

In a trading update for the 13 weeks to 1 May, the grocer said it had experienced a “very challenging” trading environment as it blamed soaring inflation and falling customer confidence for the slump in its Q2 sales.

While like-for-like sales dipped over the quarter, trading did improve towards the end of the period, thanks to strong sales over both Mother’s Day and Easter.

Meanwhile, total revenue was given a 2.5% boost to £4.6 billion, driven by a 54% increase in fuel sales.

Adjusted EBITDA grew by £9m to £71m, compared to the same period last year, when the supermarket benefitted from the “significant” Covid restrictions in place at the time.

READ MORE: Is Aldi set to break the ‘Big 4’ by toppling Morrisons?

“In a very fragile and difficult consumer environment, Morrisons has continued to deliver a resilient performance,” said Morrisons CEO David Potts.

“This quarter traded over a period of significant Covid restrictions last year when travel and hospitality were both severely limited. As those two activities returned to more normal patterns this year, we saw very strong growth in fuel sales but a step back in grocery.”

Potts also said that retail like-for-like sales in the quarter were impacted by last year’s discounts offered to NHS staff, teachers, farmers and Blue Light cardholders for their efforts during Covid.

The past three months have been a busy time for Morrisons.

The supermarket giant’s £7bn takeover by private equity firm CD&R was approved by the Competition and Markets Authority (CMA), it rescued symbol group retailer McColl’s for £190 million – in a move which is currently being investigated by the CMA – and launched its biggest ever price-cut campaign which covered 500 essential products.

“In April, we launched one of our biggest ever price cut campaigns which included over 25% of our entry level products,” said Potts, who also spoke of Morrisons’ focus on being a “broader, stronger, popular and accessible business”.

“But these are serious times and there is further serious work ahead of us as we help customers and colleagues face into the highest inflation for 40 years.”

Most recently, Kantar data revealed that Aldi is firmly on course to topple Morrisons from its position as one of the Big 4 grocers by this time next year.

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