WM Morrison Supermarkets PLC (LON:MRW) said retail sales growth eased in the third quarter without the benefit of the warm weather and World Cup that boosted its performance during the summer period.
Shares fell 4.7% to 242p in morning trading.
The supermarket chain reported a 5.6% increase in total like-for-like sales, excluding fuel, in the 13 weeks to 4 November with retail sales up 1.3% and wholesale up 4.3%.
That compares to total like-for-like sales growth of 6.3%, excluding fuel, in the second quarter when retail sales rose 2.5% and wholesale sales gained 3.8%.
Including fuel, like-for-like sales rose 6% in the third quarter. Total sales grew 6.0%, excluding fuel, or 6.4% including fuel.
Wholesale arm holding growth up, says analyst
The wholesale arm recently secured deals with MPC Garages in the UK and Big C in Thailand.
Morrisons said it expects to begin wholesale supply to MPK Garages shortly. It also has deals with Amazon, Rontec, Sandpiper, McColl's, which together with its own petrol forecourt shops, means it will soon supply more 1,700 convenience stores with branded and own-brand products.
Laith Khalaf, senior analyst at Hargreaves Lansdown, said: "Sales are still heading in the right direction, but it’s the wholesale business holding growth up.
"Selling goods to the likes of McColl’s newsagents and Amazon is lower margin, so doesn’t feed through to the bottom line quite so well, though strategically this business adds another string to the Morrisons bow.
"That’s important given the round of re-invention we have seen in the supermarket sector, with Tesco buying Booker and Sainsbury and Asda looking to tie the knot."
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Morrisons expands product ranges
In its own supermarkets, the company has been tackling tough competition by improving its customer offerings with more loose local produce, a cheaper wonky vegetable range and the expansion of its “Best” premium products. Morrisons plans to launch a new vegan range and children’s brand called ‘Little Kitchen’ next week.
The group has also invested in its digital services and online delivery, having launched the Morrisons More app in the third quarter. The app allows users to collect loyalty points, receive offers, shop for groceries and look for recipes.
Despite the fierce supermarket rivalry and a shift towards online shopping, Morrisons continued to expand its store portfolio, opening its third store this year in Birmingham.
"After another period of strong growth, and with more customers enjoying shopping at Morrisons, we have now completed three years of positive like-for-like,” said chief executive David Potts
"Our exceptional team of food makers and shopkeepers are providing good quality food at great prices, and building a broader offer in store, online and for our wholesale customers."