The shares of Morrisons (LSE: MRW) (NASDAQOTH: MRWSY.US) dropped 1% to 278p this morning after the UK’s number four supermarket revealed third-quarter results in line with market expectations.
The grocer’s total sales were flat compared to last year, but on a like-for-like basis, sales declined by a disappointing 2.4%. After a difficult few years for Morrisons’ traditional large-scale supermarket stores, it came as little surprise to investors to see these shops struggling.
Morrisons, which has traditionally been skewed towards larger stores away from the lucrative south-east, is finally beginning to exploit new channels for sales. Convenience-type stores, which Tesco has mastered in the last decade, were not even a part of Morrisons’ real estate base last year. Today, Morrisons announced it had more than doubled its number of M Local stores to 69, and confirmed its online offering was set to launch in January.
Giving his outlook for the rest of the year, Morrisons chief executive Dalton Phillips added:
“We expect the market to remain challenging for the remainder of the year and continue to manage the business tightly. Our performance in the third quarter was in line with our expectations and accordingly our financial outlook for the full year remains unchanged.”
With a market cap of £6.5bn, Morrisons’ shares trade at 11 times expected earnings, and offer a prospective dividend yield of 4.7%.
