Supermarket chain Morrisons has reportedly experienced a poor Christmas sales period, according to a prediction from a well known retail broker.
In addition, Morrisons was one of just two companies on the FTSE100 whose share price fell on the opening of trading on Wednesday 2 January, dropping to 260 pence from a high of 263 pence. British American Tobacco was the other FTSE100 faller, dropping by 0.66% at the time of going to press.
The supermarket giant also failed to meet analysts expectations last Christmas, with sales, excluding value added tax (VAT) and fuel, growing by just 0.7% in the six weeks to January 1, 2012 against 2.4% the previous quarter. This was also despite reportedly having a record number of festive customers.
The Huffington Post UK spoke to the press relations team at Morrisons this morning, but was told they could not comment on sales or profitability issues outside of the normal announcements to the markets.
Broker Jeffries reported on Wednesday Morrisons' Christmas sales could have seen like-for-like sales down as much as 2.7%, according to the Sun's business editor Steve Hawkes.
The tweet sparked a flurry of conversations on Morrisons, including comments from Panmure Gordon's senior retail analyst Philip Dorgan, who suggested the sales drop, if true, could place the retailer in "profits warning territory".
Shore Capital's Clive Black told Huff Post UK Morrisons was expected to "be the laggard of the big four British supermarkets by some margin" for 2013, but questioned whether its disappointing sales would lead to a profits warning.
"The group's sales momentum going into Christmas was poor and we would be surprised if it could 'pull a rabbit out of a hat' and deliver a material upturn over the festive period. That said, quite whether this amounts to a profit warning remains to be seen; forecasts fell in calendar Q4 2012," he said.
"The question, therefore, revolves around the robustness of Morrisons' margins where there has been considerable self-help in recent times. If such help is evaporating then larger downgrades will ensue. More to the point, what does such a performance say about Morrisons' trading strategy, with a quarter of the estate modernised, and how long will it continue to underfperform... For these reasons we have had Morrisons on our Sell roster for some months now."
Speaking to Huff Post UK, business analyst Nick Hood said any significant fall in like-for-like sales this Christmas will have been a heavy blow for Morrisons in a highly competitive sector.
"The implications for profitability will be serious, not just in the immediate short-term, but farther ahead as the chain battles to regain and then preserve market share," he said.
“Our financial health rating for Morrisons is a strong 77 out of a possible 100, but this is likely to suffer as the chain cuts prices and margins to compete, and invests in improving the customer experience. Its suppliers will also feel the pain as they are pressurised to support the performance turnaround."
Morrisons has endured a tough past year, along with its rival supermarkets, but has particularly suffered through not offering an online shopping option, according to many retail experts.
At the end of September 2012, Morrisons defied analysts expectations by announcing a 1% profit increase, but sales figures were down in line with market expectations.
Chief executive Dalton Philips blamed the slow sales on "sustained pressure on consumer spending", but predicted a stronger second half of 2012.
Edward Garner, director at Kantar Worldpanel, wrote in a statement in December that Morrisons had experienced a sales decline of 1.1%, bringing its market share down from 12.3% a year ago to 11.7%. Its sales decline was in stark contrast to the sector overall, which experienced growth of 3.3%.
"The online grocery channel is currently growing at nearly 20% a year, and Morrisons' absence from this channel will be holding it back. However, it is expected that online wine sales via Morrisons Cellar will make a start on addressing this," Garner said.
At the end of 2012, Morrissons appointed a new group finance director - Trevor Strain, who is currently the group's UK planning and reporting finance director.
And Richard Hodgson, who left as commercial director in November following disappointing sales, has been replaced by Casper Meijer, who joins as as group trading director. Meijer joins from Dutch supermarket Albert Heijn.
News of Morrisons' expected Christmas trading comes ahead of a huge fortnight for retailers as the Christmas figures reveal who has had a successful festive period.
Tesco, Sainsbury's, Marks and Spencer, Debenhams and Domino's Pizza are among the major brands due to release their trading updates next week.