The spotlight will fall on Morrisons this week after rivals Sainsbury's and Tesco gave investors a boost with better-than-expected festive sales figures.
Supermarket chain Morrisons is expected to show an improvement in trading on Tuesday to suggest its price cutting strategy is starting to revive its fortunes.
It is thought that the Bradford-based business will post a fall in like-for-like sales of between three and four per cent for the six weeks to January 4, compared to 5.6 per cent last Christmas. The figure was 6.3 per cent lower in the 13 weeks to November 2, which itself was the first upward quarterly movement the retailer had posted for over a year.
The improved trend follows a wider plan announced in March to invest £1 billion in price cuts over three years, with the company recently launching a new loyalty card scheme to match prices at discounters Aldi and Lidl.
Other major supermarkets stepped up the price war last week with Tesco slashing prices on 380 branded goods by an average of 25 per cent.
Other major supermarkets stepped up the price war last week with Tesco slashing prices on 380 branded goods by an average of 25 per cent
Asda also cut the prices of 2,500 ‘essentials’ such as fruit and vegetables, while Sainsbury's announced further reductions as part of a £150 million price-cutting plan disclosed in November.
The strategy is a response to the ongoing supermarket price wars that has squeezed the big four grocers between premium grocers such as Waitrose at one end and discounters such as Aldi and Lidl at the other. Brokers have forecast that none of Waitrose’s big four rivals – Tesco, Asda, Sainsbury’s and Morrisons – will post like-for-like sales rises over the Christmas period.
Sainsbury's has already announced a like-for-like sales fall of 1.7 per cent, while Tesco reported a better-than-expected 0.3 per cent fall over the festive period.
The City will look for an update on Morrisons price cutting in light of the latest moves by its rivals, as well as further news on the ongoing roll out of its convenience stores.
At Morrisons' quarterly figures in November it pointed to an improved trend in its key performance indicators, with the number of items per basket now down 2.4 per cent year-on-year, significantly better than the 6.9 per cent recorded at the start of this year.
Brokers at Jefferies said: “It is still early days, but our impression is that Morrisons is gradually establishing its every day low pricing credentials (through pricing consistency), winning back customer trust and starting to stem customer losses to discounters.”
Argos owner Home Retail Group is expected to reveal solid festive trading on Thursday as it bids to revamp its Homebase DIY chain.
The City expects Argos to post like-for-like sales up 2.2 per cent, compared to 3.8 per cent a year ago when a number of video game console launches boosted trade.
Its DIY chain Homebase is forecast to report same store sales up 4.1 per cent, compared to 4.7 per cent last year as it carries out a programme of store closures and upgrades.
Hargreaves Lansdown analyst Keith Bowman said: “Tougher year-over-year sales comparatives provide the backdrop for the owner of Argos and Homebase. Electrical sales at Argos remain a core component.”
In October the group said it would close a quarter of its 323 Homebase stores by early 2018 due to failings in their sales performance.
Group chief executive John Walden said Homebase would launch a three-year plan to combat the threat of online rivals and the rise of a generation “'less skilled in DIY projects” in a sector already squeezed by the economic downturn.