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* Morrisons underlying sales down 1.7% in 22 weeks to Jan. 5
* UK grocery sales up 0.5% in 4 weeks to Dec. 28 - Nielsen
* Industry data shows all major supermarkets struggled
* Intense competition, consumer uncertainty blamed
* Sainsbury's the least worst performer
By James Davey
LONDON, Jan 7 (Reuters) - Morrisons was the big
loser as Britain's major food retailers endured their worst
Christmas since 2014, hurt by intense competition and sustained
consumer uncertainty which deterred shoppers from splashing out.
Industry data from market researchers Nielsen and Kantar
showed all of Britain's big four supermarket groups - market
leader Tesco, Sainsbury's, Walmart
owned Asda and Morrisons - suffered sales declines in
the 12 weeks to the end of December and continued to lose market
share to German-owned discounters Aldi and Lidl.
Both data sets showed Morrisons was the industry laggard and
the firm's own trading statement confirmed a weak performance.
Nielsen said British supermarkets' total sales over the four
weeks to Dec. 28 period rose just 0.5% from last year - the
lowest sales growth over the Christmas period in five years. It
said while shoppers visited supermarkets more often, they
purchased fewer items and spent less each time.
"There was no sign of the post-election rush many had hoped
for in the final weeks before Christmas, with shoppers carefully
watching their budgets," said Fraser McKevitt, head of retail
and consumer insight at Kantar.
He said consumers cut back on traditional and indulgent
festive classics, with sales of Christmas puddings down 16%,
sparkling wine sales down 8% and turkey sales down 1%.
Morrisons' own update showed its underlying sales, excluding
fuel and sales tax, fell 1.7% in the 22 weeks to Jan. 5 - a
period that included the group's third quarter and the nine-week
Christmas trading period.
"Throughout (the period), trading conditions remained
challenging and the customer uncertainty of the last year
persisted," Chief Executive David Potts told reporters.
"The market was also highly promotional (and) collectively
more competitive, especially in areas such as beers, wines and
spirits, fuel and in-store coupons," he said.
UK pay growth has slowed since the middle of 2019 - a year
characterised by political uncertainty in the run-up to several
Brexit deadlines and the Dec. 12 national election.
Potts said there would be uncertainty in the grocery market
until the terms of Britain's exit from the European Union become
clearer.
BETTER THAN FEARED
Morrisons' performance was, however, better than feared,
with analysts forecasting a decline of 2.2% from the year
earlier period. The firm said it still expected 2019-20 pretax
profit within the range of analysts' forecasts of 400-431
million pounds ($527-$568 million), up from 396 million pounds
in 2018-19, thanks to the tight management of costs.
Shares in Morrisons were up 2.2% at 1112 GMT, reversing
Monday's losses and paring losses over the last year to 10%.
The run up to Christmas marks the most important, and
competitive, time of the year for British supermarkets.
In recent years all four major groups have had to fight off
the challenge from Aldi and Lidl, which are continuing to open
new stores at a rapid pace. The discounters are also selling
more premium products, making them more competitive over
Christmas.
Kantar noted that Aldi and Lidl's combined market share of
13.7% is more than treble what they held in December 2009.
On Monday Aldi UK reported a 7.9% increase in total sales
for the four weeks to Dec. 24 and said its like-for-like sales
were positive.
The Nielsen and Kantar data showed Sainsbury's as the least
worst performer, followed by Tesco and Asda. Online seller Ocado
maintained its position as Britain's fastest growing
grocer with sales growth of 12.5%, Kantar said.
Shares in Sainsbury's were up 1.6%, while Tesco was up 0.6%.
Sainsbury's, which is trying to rebuild confidence in its
strategy following a botched attempt to take over Asda, updates
on trading on Wednesday, followed by Tesco and Marks & Spencer
on Thursday.
($1 = 0.7583 pounds)
(Reporting by James Davey; editing by Kate Holton, Kirsten
Donovan)
