3Q17 TRADING UPDATE

Like most British companies, Morrisons reports sales growth each quarter and updates on profits only at the half-year and full-year. For 3Q17, ended October 30, Morrisons posted comparable sales growth ex fuel of 1.6%. Total sales ex fuel were down 1.2%, impacted by the closure of some supermarkets and the disposal of its convenience-store chain in September 2015. Morrisons met the consensus estimate of 1.55% comparable sales growth recorded by S&P capital IQ. 3Q17 marked the fourth consecutive quarter of positive comparable sales growth, although comps were down sequentially from 2.0% in 2Q17.

NONFINANCIAL METRICS

• Morrisons’ transaction numbers increased by 4.1%, versus a 4.3% increase in 2Q17.
• The average number of items per basket fell by 5.5%, versus a fall of 5.0% in 2Q17.
• Morrisons noted price deflation of 1.0% in the quarter.
• The company launched “The Best,” a premium own-brand range of foods.
• Seasonal Halloween sales rose by 20% year over year.

OUTLOOK

The company did not provide any full-year guidance, beyond noting that it is committed to further strengthening its balance sheet and lowering debt; its net debt target remains around £1.2 billion by year-end. For the full year, analysts expect total sales to decline by 0.4%, EBIT to climb by 6.4% and GAAP EPS to rise by 8.1% to 10.24 pence. The company will update on Christmas-period trading on January 10.