Yet the market reacted to the underwhelming numbers pushing shares up gently, revealing just how low the bar has been set.
The FTSE 100-listed grocer reported that like-for-like (LFL) sales excluding fuel were fell 1.7% over the 22 weeks ended 5 January, without quantifying Christmas trading. But comment of some “unusually challenging” conditions provided a clue.
Analysts pointed out the third quarter, ending on 3 November, recorded a 1.2% LFL dip (excluding fuel), meaning things went downhill over the key Christmas period.
As mentioned, the Morrison share price rallied – 3% at the opening bell – though it should be pointed out this followed a sharp decline on Monday as when market feared a profit warning.
“Morrisons managed costs down to offset some of the impact of the weak LFL sales and has said that it still expects full-year pre-exceptional profits to be ‘within the current range of analysts’ forecasts’,” said Nick Bubb, retailing analyst and consultant.
In the golden days of retailers, a sales dip over the festive period would have precipitated a share meltdown. Today a flat line is welcome as a decent outcome.
While the latest market data provided by Kantar showed grocery spend in the UK in the 12 weeks to 29 December was £29.3bn, 0.2% higher than 2018, the pressures over recent years have increased.
Clive Black, head of research at house broker Shore Capital, noted that of the so-called Big Four, J Sainsbury PLC (LON:SBRY) and Tesco PLC (LON:TSCO) may also report flat sales for the period in their updates out on Wednesday and Thursday respectively.
Of the quartet, Sainsbury's possibly has the most to prove after its 15% drop in half-year profits, which management said would be recouped in the second half.
Its supermarkets are set to post a better performance than the Argos chain it bought in 2018 and which is undergoing a thorough reorganisation.
Black said he would be “surprised” if Tesco’s update resulted in a change of full-year forecasts, as the group mulls over a possible sale of the Asian business, while UK sales may be slightly below zero.
Across the sector, Morrisons is likely to emerge as the sector’s worst performer in the previous four months.
“What we expect for Morrisons to do in the next three to six months is to be thinking about why trading was poor in the last six months, putting into place some tactics to stabilise trading,” Black said.
“Most fundamentally, I think it has got a reasonably well-thought through plan to self-improve its business and just try to find complimentary, quite capital-light growth. I think that remains intact.”