Morrisons sees best Christmas performance for seven years

Morrisons has reported its strongest Christmas sales for seven years as the supermarket chain's recovery continues.

Like-for-like sales for the nine weeks to 1 January rose 2.9%, with fresh food, beers, wines and spirits, and its Nutmeg clothing all performing well.

Morrisons added it now expected annual underlying profits of £330m-£340m, beating analysts' consensus of £326m.

Early reports suggest 2016 was good for food sellers. Most leading supermarkets will give updates this week.

On Monday, discount food retailer Aldi reported record sales, and Marks and Spencer, Tesco and Sainsbury's are also due to give updates this week on their Christmas trading.

Earlier on Tuesday, a survey by the British Retail Consortium said food sales had spearheaded a "bumper Christmas" for retailers.

Majestic Wine was another retailer that had a good Christmas. It reported its best-ever Christmas trading figures, with like-for-like sales up 7.5% in the 10 weeks to 2 January.

'Quite chipper'

Morrisons has been in the throes of a reorganisation for the past 18 months, led by chief executive David Potts, who took over the running of the business from Dalton Phillips in February 2015.

Changes have included pulling out of running smaller convenience stores under the M name, as well as a focus on cutting prices.

Alongside this, Morrisons has added new products to its premium range - sold under the "Best" label - which it said had proved "very popular".

Analysis: Emma Simpson, business correspondent

No doubt about it, Morrisons was one of the big winners this Christmas.

But judging by the latest industry data, business has been good for the sector in general. Because Christmas fell on a Sunday, there was a whole week to shop. And it was huge.

When it came to food, we really did leave it to the very last minute to stock up. But December's figures are in comparison to a pretty weak Christmas the year before.

Even so, it seems that this has been a better Christmas than the big grocers might have expected given the gloomy predictions ahead of the EU referendum vote.

Improvements

The company said it had improved service standards at the checkouts, including reducing queuing times by opening more tills.

Mr Potts said customers had been feeling "quite chipper" over Christmas and that the retailer had "found its form".

He said: "This Christmas we made further improvements to the customer shopping trip.

"We stocked more of what our customers wanted to buy, more tills were open more often, and product availability improved as over half of sales went through our new ordering system."

Investors liked what Morrisons was serving up, too.

By lunchtime, the shares were among the top gainers on the FTSE, rising nearly 4%.

Inflation returns

Latest figures from industry analysts Kantar Worldpanel showed Morrisons had a 10.9% share of the UK's grocery market in the 12 weeks to 1 January. Tesco continues to dominate the sector with a share of 28.2%.

Morrisons introduced price cuts on a number of its products late last year, but Kantar said inflation had returned to the sector for the first time in 28 months.