By Kathy Gordon
LONDON--Disappointing festive sales from grocer Wm Morrison
Supermarkets PLC (MRW.LN) Monday underscored an increasingly
polarized retail sector as hard-up shoppers searched out bargains
online or at discount stores.
The U.K.'s fourth-largest supermarket chain reported a 2.5%
decline in same-store sales excluding VAT and fuel in the six weeks
to Dec. 30, broadly in line with expectations, and avoided a profit
warning by maintaining tight cost control.
Morrisons is the only major supermarket without an online
grocery offer or an established convenience store network, the
dearth of which is beginning to impact growth potential, while
competition from discount stores like Aldi and Lidl are eating away
at all the quoted retailers.
Chief Executive Dalton Philips told reporters Monday that he
will reveal online grocery plans in March but insisted that
Morrisons could benefit from "late-mover advantage" avoiding the
pitfalls of its rivals and focusing on profitability.
Online grocery currently accounts for around 5% of U.K. grocery
sales but is growing at 20% a year, and web sales across the sector
are proving a key differentiator among hard-pressed retailers.
Clothing chain Next on Thursday reported a 3.9% rise in sales
between Nov. 1 and Dec. 24, buoyed by its popular online and
directory business, which offset continued decline in retail store
like-for-like sales.
Morrisons is widely expected to have been the low point in
supermarket retail updates. J Sainsbury PLC (SBRY.LN) and Tesco PLC
(TSCO.LN) are due to report Wednesday and Thursday, respectively,
and are expected to have enjoyed positive sales growth.
After five years of austerity, intermittent recession and
constrained consumers, the polarization of the retail sector
remains stark. The number of retail failures has been growing
steadily, with 194 going to the wall in 2012, according to
Deloitte, up from 183 and 165 in the prior two years. The next two
weeks will expose the winners and losers.
Retail sales data from the British Retail Consortium due Tuesday
will shed more light on the difficulties faced by the sector.
Still To Report:
Jan 8: Debenhams PLC
Jan 9: J Sainsbury PLC; Ted Baker PLC
Jan 10: Marks & Spencer Group PLC; Tesco PLC
Jan 15: Ocado Group PLC
Jan 17: Home Retail Group PLC; AB Foods PLC; Dixons PLC
Jan 24: Carphone Warehouse Group PLC
Feb 7: Supergroup PLC
-Write to Kathy Gordon at kathy.gordon@dowjones.com
By Kathy Gordon, Dow Jones Newswires; 44-207-842-9293;
kathy.gordon@dowjones.com
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