Morrisons posts solid sales growth in first quarter

Morrisons reported solid sales growth as the supermarket chain benefited from a busy Easter and continued its revival in a fiercely competitive market.

Britain's fourth-biggest grocer said like-for-like sales in the 13 weeks to 5 May, excluding fuel, rose 2.3%. Retail sales in the first quarter were up 0.2% and wholesale sales rose 2.1%.

Morrisons registered its fourth successive first-quarter increase in like-for-like retail sales. Sales over the Easter period rose 1.7% as unusually warm weather prompted households to spend on ice cream and hay fever remedies as well as Easter eggs and chocolate.

Morrisons' trading update also showed continuing progress under chief executive David Potts, who has improved store layouts, reduced prices on popular items and struck deals to supply Amazon and convenience store chain McColl's with products.

Britain's supermarkets are grappling with difficult trading as shoppers go online and are lured by low prices at Aldi and Lidl.

Potts said: "We expect the market to remain competitive and challenging … However, we remain confident that Morrisons still has many sales and profit growth opportunities ahead, and continue to expect that growth to be both meaningful and sustainable."

Morrisons also said it had loosened its agreement with Ocado for operating its online business. After a fire at Ocado's Andover warehouse Ocado will have sole use of its Erith site until February 2021. Morrisons said it would be able to serve customers online during this time by different means.

The companies have agreed Ocado will no longer be Morrisons' exclusive digital partner, giving Morrisons more flexibility and growth opportunities. Certain exclusivity provisions will also be relaxed for Ocado.

Potts said: "We will keep growing Morrisons.com for our customers and save some cost, returning to the Erith [fulfilment centre] when it is more mature.

"Our new agreement allows us to have more than one digital partner, and opens the way for significant potential opportunities and partnerships in this important growth area for Morrisons."

The company's shares fell 0.5% to 212.6p at 0810 BST.