Dalton Philips to leave Morrisons as Christmas like-for-like sales fall -3.1%

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Morrisons: targeting 500 stores

Morrisons: growth in convenience but not a golden ticket?

Morrisons chief executive Dalton Philips is to leave the supermarket after five years at the helm.

Philips will stay until the retailer’s year-end results in March. A search has begun for his replacement.

News of Philips’ departure accompanied Morrisons’ Christmas trading update, in which the supermarket reported a 3.1% decline in like-for-like sales for the six weeks to 4 January 2015.

Himanshu Pal, director retail insights, Kantar Retail, said: “As expected, Morrisons’ Christmas performance was the worst of the top four grocers. The slump in LFL sales (down 3.1%) marked the end for Dalton Philips who was already facing criticism from stakeholders and life president Ken Morrison.

“Morrisons has taken a hit from the discounters and is likely to continue suffering in the short-to-medium term as shoppers continue to defect to the likes of Aldi and Lidl and as a result of food deflation.

“While Morrisons’ overall Christmas results are disappointing, the retailer can take heart from the performance of its convenience and online grocery channels. These channels are relatively new to Morrisons’ portfolio and only account for a fraction of total sales (combined sales of £500m for FY 2014), but the two channels continue to exhibit good momentum with regards to growth as well as shopper traction.”

However, David Gray, retail analyst at Planet Retail, said convenience and online alone could not solve Morrisons’ problems.

“With a marked decline in like-for-like sales, the problems are all-too-evident across the chain’s core business – stores trading on 20,000-40,000 square feet. Morrisons will need to focus efforts here, rather than on its tiny c-store and online grocery arms.

“The recent decision by Tesco to close some 25 Express convenience stores shows that this channel does not necessarily offer a golden ticket to success. Morrisons needs to think carefully about allocating funds to c-store and online grocery expansion, which might be better spent overhauling the company’s most profitable business unit – hypermarkets & superstores.“