Morrisons in festive flop: Setback for private equity owners as rivals cash in

Morrisons was the biggest loser among UK supermarkets over the Christmas period as shoppers flocked to the rivals.

In a painful setback for private equity owners, industry figures showed sales at the Bradford grocer fell 2.9 per cent to £3.1 billion in the 12 weeks to December 25.

Waitrose, part of the John Lewis Partnership, was the only other grocer to suffer a drop, with sales falling 0.7 per cent.

The magnitude of the slump is raising alarm again about Morrisons’ direction since its £7bn takeover by US buyout firm Clayton, Dubilier & Rice (CD&R) in 2021.

And it stood in stark contrast to rivals with rising prices and strong demand, taking total grocery sales in the last four weeks before Christmas to a record £12.8 billion, up 9.4 per cent on the same period a year earlier.

Kantar’s report found that Morrisons’ traditional rivals Tesco, Sainsbury’s and Asda fared much better.

Sales at Tesco, Sainsbury’s and Asda rose by more than 6 percent.

German discounters Lidl and Aldi were again the fastest growing supermarkets and attracted hordes of poor families.

Aldi, which last year overtook Morrisons as the UK’s fourth-largest grocer, also posted £3.1 billion in sales in the 12 weeks to Christmas Day. That was 27 percent more than in the same period a year earlier.

The Kantar report came a day after Aldi boss Giles Hurley hailed its best December ever.

And Lidl, which is also expected to surpass Morrisons in the coming months, saw sales of £2.5 billion, up 23.9 per cent year-on-year.

The German discounters together make up 16.3 percent of the British supermarket market, behind only Tesco, which has a share of 27.5 percent. Sainsbury’s has a 15.5 percent share and Asda 14 percent.

Morrisons now owns just 9.1 per cent, down from 10 per cent before the £7bn takeover by US private equity firm CD&R, but up from 9 per cent a month ago.

It is struggling under the weight of a mountain of £6bn of debt built up to fund the takeover.

The cost of paying off this debt rises as interest rates rise and as a result it has pushed prices up faster than rivals.

It has seen an exodus of shoppers and was humbled when it lost its coveted spot in the big four to Aldi.

In an interview with the Daily Mail last month, former Morrisons chief executive Paul Manduca said founder Sir Ken Morrison was ‘turning in his grave’.

CD&R bought Morrisons in a deal orchestrated by former Tesco supremo Sir Terry Leahy, who is an advisor to CD&R.

The deal was opposed by MPs and senior city figures.

Industry experts have labeled the acquisition as “a distraction at best, a disaster at worst.” Hargreaves Lansdown analyst Susannah Streeter said: ‘Morrisons is struggling to regain its lost position.

As the discounters roar ahead, devouring market share as shoppers seek refuge in value amid the cost of living storm, Morrisons has struggled to regain its lost position.

“Morrisons seem to have had little leeway to lower prices in the same way as its rivals.”

She said it faces a “huge fight” to regain the number four spot.

• Sainsbury’s is raising wages for its 127,000 hourly workers in its third increase in just over a year. It has nearly 600 supermarkets and more than 800 convenience stores, and will raise wages to at least £11 an hour from February, up 10 percent year-on-year, costing it around £185 million. It comes on top of a £20m investment in October, during the latest increase, after rising from £9.50 to £10 in 2021.