Struggling supermarket Morrisons blamed worsening trading on its weakness in convenience and online retailing as underlying sales slumped by 2.4% in its latest quarter.
Britain’s fourth-biggest grocer said that subdued consumer confidence also hit sales, with supermarkets being forced into heavy discounting to win over cash-strapped shoppers.
The deterioration in like-for-like sales in the 13 weeks to the start of November was worse than expectations for a 1.7% decline and will heap further pressure on chief executive Dalton Philips.
It comes after a 1.6% decline in the six months to the start of August, also echoing industry figures showing the chain’s market share has shrunk to around 11.2% from 11.4% a year ago.
Morrisons, which is pinning hopes on an expansion into online retailing and convenience stores, said its low exposure to these areas “continues to impact sales performance”.
It said: “Consumer confidence remains subdued and we continue to see heavy promotional activity across the industry.”
It added the market will remain “challenging” for the rest of the year, but insisted the performance was in line with its expectations.
Morrisons – which is planning a major new store on Rousay Drive in Aberdeen – said it now has 69 M Local convenience stores after opening 36 during the quarter, a rate of three a week, with around half in London and the South East.
The group said it is on track to have 100 convenience stores by the year end and open another 100 in its next financial year.
It is launching its online food offer in partnership with internet grocer Ocado in January.
Mr Philips has admitted the supermarket is two decades behind its competitors, which have had an internet presence since the 1990s.
Including the contribution from new stores, total sales at the Bradford-based chain were up 1% in the third quarter.
Mr Philips said: “We continue to grow our sales in this tough market whilst making great progress on our strategy to be a multi-channel retailer.
“I said at the outset that our online offer would be unmistakably Morrisons and I’m very confident that the service we unveil in January will live up to that promise.”
He said the grocer’s online service will be able to serve 50% of UK homes by the end of next year.
It launches its Christmas advertising campaign today, with the slogan “Go on it’s Christmas”.
Morrisons said the festive campaign aims to “help customers treat themselves and their families with award-winning food at affordable prices”. It will include “industry-leading deals”.
Morrisons has also relaunched 11,000 own brand products, and will now focus on improving its supply chain.