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WM Morrison falls as it warns of ‘change in consumer behaviour’ despite sales rise over Christmas

Last updated: 03:45 08 Jan 2019 EST, First published: 02:35 08 Jan 2019 EST

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Updates from Tesco, Sainsbury et al later this week are also expected to confirm Aldi and Lidl’s rise

Wm Morrison Supermarkets PLC (LON:MRW) saw its shares fall on Tuesday after warning of "changes in consumer behaviour" even though its sales over the key Christmas period rose slightly more than analysts had expected.

Retail like-for-like sales at Britain’s fourth-largest supermarket climbed 0.6% in the nine weeks ended January 6. The City had been looking for growth of 0.5%.

Including its wholesale division, which is now supplying McColl’s Retail Group PLC (LON:MCLS) stores, group like-for-like sales rose 3.6%.

READ: Morrisons to slash prices as Aldi reports record Christmas

It was Britain’s fourth-largest supermarket’s fourth consecutive holiday season of like-for-like sales growth as part of its turnaround under chief executive David Potts.

“Our performance shows colleagues are listening hard and responding to customers, providing consistently great value and good quality when it matters most,” said Potts.

The trading update, not entirely unexpectedly, did make a nod towards the growing threat of Aldi and Lidl, with bosses noting there had been a “change in consumer behaviour during the period”.

The German discounters have been taking customers from the ‘Big Four’ for a while now and their rise up the ladder shows little sign of stopping. Only yesterday (Monday), Aldi posted a record-breaking set of Christmas results which saw it achieve sales of almost £1bn in December.

Margins under pressure

To try to ward off the threat posed by their low-cost peers, Britain’s biggest grocers have been slashing prices, which has been crippling their already wafer-thin margins.

Morrisons said it once again taken measures to be “more competitive” over Christmas, the most lucrative and therefore important period for many retailers.

That followed yesterday’s announcement that the Bradford-based company was cutting the prices of a further 935 “store cupboard favourites” such as tinned tomatoes, cereals and ready meals.

Peers J Sainsbury plc (LON:SBRY) and Tesco PLC (LON:TSCO) are expected to echo Morrisons’ concerns when they report on their Christmas trading later I the week.

Despite the growing competition, Morrisons made no changes to its forecasts and said it was “well set” to keep improving the shopping experience for its customers.

In early morning trading, Morrisons shares were 2.3% lower at 214.60p.

 -- Adds share price --

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