Morrisons turnaround strategy results in strongest quarterly sales growth in over a year

Morrisons has posted its best quarterly sales growth in more than a year, with the Morrisons turnaround strategy delivering rising volumes, lower prices and a double-digit jump in online sales. The Bradford-based supermarket group reported group like-for-like sales growth of 3.2% over the 13 weeks to 26 July, against the same period a year earlier, with total sales reaching £4.1 billion for the quarter.

Like-for-like sales measure performance in stores that have been open long enough to allow a fair comparison, stripping out the effect of new openings. The figure is closely watched as a gauge of underlying trading health.

What is driving the Morrisons turnaround strategy?

Rami Baitiéh, who took charge as chief executive of Morrisons in November 2023 according to International Supermarket News, said the group’s trading was “robust” and that performance had surpassed the wider UK grocery market following investment in improving pricing. He brought with him a 28-year career at the Carrefour Group, according to his biography on the Morrisons Corporate website, giving him deep experience of large-scale supermarket operations before arriving at the Bradford retailer.

Baitiéh said: “Our stronger sales momentum reflected a broad-based improvement across the business, with our supermarkets, online, convenience, pharmacy and Myton manufacturing businesses all reporting good growth, underlining our progress with our plans to renew and modernise Morrisons.” Hot weather and the World Cup helped lift the quarter’s performance, the company added.

Lower prices were cited by Morrisons as a key factor in pushing up sales volumes, with the private equity-owned firm saying the combination of competitive pricing and volume growth was clear evidence that its strategy was working. Online sales recorded a double-digit percentage increase over the same period, though the company did not give a specific figure.

Convenience stores and cost savings add momentum

Part of the Morrisons turnaround strategy has centred on expanding its convenience business. The group has opened 71 new Morrisons Daily franchise stores so far this year and said it has plans for “hundreds more” over the coming years. The convenience format allows the brand to reach customers in smaller, local settings without the overhead of a full supermarket.

Cost savings have also accumulated at pace. Morrisons delivered around £53 million in additional savings over the latest quarter, taking the total to almost £1 billion since the overhaul was first launched. That figure spans multiple quarters of disciplined cost management across the business.

Baitiéh said: “Our stronger like-for-like sales, the combination of lower prices and volume growth, and our market share improvement, are all clear evidence that our strategy is delivering and that we remain on track with our plans.”

Forecourt sale and the debt question

The turnaround is playing out against a backdrop of significant debt, which has long weighed on the business since it was taken private. One move aimed at addressing that pressure: Morrisons announced the sale of its petrol forecourts to Motor Fuel Group for £2.5 billion, according to International Supermarket News. That disposal represents one of the larger asset sales in recent UK supermarket history and provides a substantial cash injection for the group.

Morrisons also said it has made a “good start” to the current quarter and described itself as “well-prepared” for Halloween, suggesting trading has held up into the autumn period. With cost savings continuing to accumulate and the convenience business expanding, the group’s next set of results will show whether the Morrisons turnaround strategy can maintain its momentum through a competitive festive season.