Morrisons has reported a surge in sales of fuel and takeaway meals in recent weeks, as life in the UK slowly returns to normal.
The Bradford-based grocer’s like-for-like sales rose 2.7% excluding fuel in the 14 weeks to 9 May, compared with the same period last year. The figure is down sharply from the 9% jump recorded in the Christmas quarter. Including fuel, sales were 4.7% higher year-on-year.
Fuel sales at the group’s forecourts jumped 17.5% with fuel volumes almost back to pre-pandemic levels by the end of the quarter. Sales were also boosted by higher petrol and diesel prices. According to the AA, unleaded petrol prices rose to 126.3p per litre in April from 110.4p a year earlier, while diesel increased to 129.1p from 115.6p.
“The pandemic is not yet over, but it is in retreat across Britain and there is much to be positive about as something approaching normal life begins to take shape,” said David Potts, the Morrisons chief executive.
Potts hailed a “renaissance of the supermarket in Britain” during the pandemic, when Brits cooked more at home, but added: “The nation has a summer of socialising and sport to look forward to.”
He hinted at price cuts in the months ahead as Morrisons battles to stay competitive against the discounters Aldi and Lidl. He also promised promotions around the Euro football tournament that starts on 11 June, which is expected to boost sales of pizza, BBQ food, soft drinks and alcohol.
Morrisons’ cafes will open their doors again next Monday, when indoor venues in England, including bars, restaurants, cinemas and theatres, are allowed to reopen under the government’s roadmap for easing lockdown.
The company said Mother’s Day and Easter were big selling events and takeout food sales, such as its £3 meal deals, had improved strongly in recent weeks.
“Clearly consumers are much more back on the road and outdoors,” said Potts. “Quite a lot of people are working a bit less from home … We are seeing smaller baskets, more frequent shopping trips.”
Morrisons’ online sales more than doubled in the quarter and now account for more than a tenth of its total takings. The supermarket sells food through Amazon Fresh with same-day deliveries and said this was its fastest-growing online channel.
The company said profit before tax and one-off items would be higher this year than the £431m it would have achieved last year, had it not waived its right to claim the £230m business rates relief. Analysts are forecasting profits of £435m this year. The firm is expecting another year of “meaningful” profit growth next year.
Last year, profit halved to £201m on sales of £17.5bn, as Morrisons incurred £290m of extra costs because of the pandemic, including covering for worker absence and paying store staff a bonus. Covid costs have since fallen to £27m in the first quarter, to pay for extra worker absences and more marshals during the lockdown at the start of the year.
Sophie Lund-Yates, an analyst at Hargreaves Lansdown, said: “Morrisons is still an underdog when it comes to online. There’s still a real opportunity though, because it offers the chance for exceptional growth in the coming years, and we’re already seeing signs of this. However, it’s too soon to know if the group left digital investment too late, and risks being permanently outshone by bigger rivals.”
