FTSE rally eludes UK grocery giants
SUPERMARKET chains Morrisons and Sainsbury’s failed to make the most of UK investors’ New Year optimism yesterday after analysts raised fears that their performance had been less than stellar over the crucial Christmas trading period.
Morrisons was one of just three fallers in the FTSE – closing down two per cent – after house broker Jefferies predicted that the grocer will next week reveal a 2.8 per cent drop in like-for-like sales for the six weeks to 30 December.
Analyst James Grzinic said: “We expect Morrisons to kick off the January trading season in a weak manner, with recent market share updates revealing a weakening momentum despite a soft comparable base.”
The slowdown in sales “reflects consumers trading down to discounters and continued online share shift”, Grzinic added.
The Bradford-based grocer has lagged rivals in moving online and launching convenience stores.
Panmure Gordon analyst Philip Dorgan told City A.M “there was a good chance” of the company issuing a profit warning should sales continue to deteriorate.
Larger rival Sainsbury’s also suffered a blow to its share price yesterday, falling 2.6 per cent, after Oriel Securities cut its target price and predicted a tougher trading period for the group since its glowing interims in November.
The broker said the decision to offer 10p a litre off petrol for £60 spenders from 27 December to 2 January was” a response to an uninspiring Christmas”.
British American Tobacco, was the only other FTSE 100 faller, closing down 0.6 per cent.