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Wm. Morrison Christmas Sales Dip, Sees Profit At Lower End Of View; Stock Down

1/9/2014 4:10 AM ET

Shares of Wm. Morrison Supermarkets Plc (MRW.L, MRWSY.PK) declined around 6 percent in the morning trade in London after the food retailer reported lower sales and like-for-like sales in its 6-week Christmas trading period with a slowdown in market growth. Looking ahead for the full year, the company now projects underlying profit to be towards the lower end of market estimate range.

Chief Executive Officer Dalton Philips said, "In a very tough market our sales performance over Christmas was disappointing. However we are firmly focused on driving our core business and accelerating our penetration of the fast growing channels. Our convenience business is building towards an operation of scale and the first food deliveries of Morrisons.com will be made tomorrow, reaching half of UK households by the end of the year."

In its Christmas trading and pre close statement, the company said its total sales in the 6 weeks to January 5 were down 1.9 percent excluding fuel, and down 3.3 percent including fuel. Like- for-like sales declined 5.6 percent, while the drop was 7.1 percent including fuel.

Wm. Morrison said its Christmas period has been very challenging and that hard pressed consumers elected to economise and managed their budgets very tightly, buying less and shopping selectively across a range of formats and retailers.

The company added that its sales performance was not as strong as it had planned, although it was able to maintain high standards of service and strong availability throughout this peak period. The accelerating importance of the online and convenience channels, where Morrisons is currently under-represented, intensified the difficult market conditions, the company noted.

Further, Wm. Morrison said its rollout of convenience stores continues at pace with 85 now open and with a target of 200 by the end of 2014/15. The company's online food operation is ready to launch.

Looking ahead, the company said its Board expects that full-year underlying profit performance will be towards the bottom of the range of current market expectations. According to the firm, the current market estimates for underlying profit ranges from 783 million pounds to 853 million pounds, with consensus of 812 million pounds.

Wm. Morrison stated that the sales environment continues to be very challenging, yet it has continued to manage business very tightly.

In London, Wm. Morrison shares are currently trading at 240 pence, down 14.20 pence or 5.59 percent.

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by RTT Staff Writer

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