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Hopes not high as Morrisons kicks off post-Xmas supermarket updates

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Final results are also due from FTSE 250 self-storage Safestore

WM Morrison Supermarkets PLC (LON:MRW) will on Tuesday deliver the first update from the 'Big Four' supermarkets on the crucial Christmas period, with hopes not particularly high after German discounter Aldi reported a slow-down.

The market was slapping a "reduced" label on the Bradford-based grocer's shares ahead of the report, as analysts predicted it will be the worst-performing of the quartet.

Excluding Morrisons’ wholesale business, like-for-like sales will have fallen by 2.5% over the festive period, analysts at Barclays predicted, following a “worrying” 1.7% decline in the period leading up to early November.

Industry data in November showed Morrisons was the weakest of the Big Four and the trend continued in December, with sales down 2.9% and its market share slipping to 10.1% from 10.5% a year earlier.  

On Monday, there was further indications of that the sector as a whole might not have enjoyed the post-election bounce that some investors were hoping for, with the disappointing update from discounter Aldi.

Sales growth of 7.9% was boosted by the German-owned group’s store openings but it was still below the 10% reported the year before. Neil Wilson, analyst at Markets.com reckoned the performance “does not suggest that the big 4 listed supermarkets experienced a tremendous festive bounce”.

Merrill Lynch on Monday also downgraded its rating for Morrisons to ‘underperform’ from ‘neutral’ and cut its price target to 185p from 195p.

Safe bet?

Results from Safestore Holdings PLC (LON:SAFE) will be a fairly safe bet, with a recent flagging of the full-year numbers helping the shares rise more than 50% last year, topping off a decade where they ascended almost 400%, hitting an all-time high of around 820p just after Christmas.

The month before, the FTSE 250-listed self-storage company reported a 5.6% increase in revenue for the year to £151.8mln, with earnings per share said to be in line with the board’s expectations.

Like-for-like revenues were up 4.7% in the and 5.6% in Paris, driven by a 3.5% increase in average occupancy across the year and a 1% increase in the average storage rate.

Investors will be looking for more comment on the outlook for the coming year, including on the 20% stake in a Dutch joint venture with Carlyle that has already snapped up one local operator of six self-storage centres in Amsterdam and Haarlem.

Analysts at broker Peel Hunt said they anticipate Safestore reporting “further earnings growth, albeit with the rate of increase slowing”.

Significant events expected on Tuesday January 7:

Trading updates: Wm Morrison Supermarkets PLC (LON:MRW)

Finals: Safestore Holdings PLC (LON:SAFE), C4X Discovery Holdings plc (LON:C4XD)

Economic data: US balance of trade, US ISM non-manufacturing

Source - Proactive Investors

Photo © Adrian Cable (cc-by-sa/2.0)

About the author

Philip Scott

Head of Equities, Director

Philip has worked as a Private Client Stockbroker for nearly 20 years, commencing his career in Operations with Rensburg Sheppards (now part of Investec plc) before spending 9 years with Killik & Co advising on and directly managing portfolios. He joined SI Capital in 2006 to head up the Private Client Advisory desk.

Philip is a regular contributor to local media commenting on stock market dynamics and is a Chartered Member of the Chartered Institute for Securities & Investment (MCSI). His RDR qualification gained special recognitionfrom the CISI for achieving the highest combined pass mark in the country for the Investment Advice Diploma in 2012.

“At SI Capital I enjoy being part of a talented team who collectively share the same desire to provide excellence in service.  My focus is to ensure that each client receives effective and optimal management of their assets.”

Philip lives locally, is married with 2 daughters and is an avid sports fan (if now predominantly from the sidelines).  His other interests include music and film.

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