Last year, supermarket heavyweights Tesco (LSE: TSCO) and WM. Morrison Supermarkets (LSE: MRW) were both on the ropes.
But Tesco has come out fighting, with new boss Dave Lewis squaring up to the challenge of building a leaner, meaner operation.
Morrisons looks punch drunk by comparison, with a dismal set of quarterly figures leaving it on the ropes.
Is now the time for investors in Morrisons to throw in the towel? And just as importantly, should they be investing in Tesco instead?
Reasonable Doubt
Morrisons did post a small rise in like-for-like Q4 sales last week, but this was overshadowed by a hefty £792m loss before tax for 2014, as it wrote down the value of its stores by £1.3bn and announced 23 closures.
Underlying profits hit an eight-year low after falling 52% to £345m. Turnover was down 4.9% at £16.8bn.
At times like these the decline of Morrison seems inexorable.
It has always been the weakest of the big four. Its customer heartland is in the wrong place, geographically, focused in economically struggling Northern regions.
Morrisons has never established itself as a go-to brand in London and the South-East, where it still feels like a half-hearted interloper.
And while former chief executive Dalton Philips was committed to its feisty 6.49% yield, the new boss is expected to take a different view.
Drastic David
At least Morrisons does have a new boss, in the shape of David Potts, who is making his introductions as I write this article.
He has a similar no-nonsense name to Tesco’s chief, and if he sets about his new role in a similar way, Morrisons might be in with a fighting chance.
Recent share price performance has been better than you might think, up 21% in three months.
Comeback Kid
Yet Tesco is up nearly 40% over the same period. When Britain’s biggest high street retailer starts throwing its weight around, investors take notice.
Dave Lewis has made an impressive start, and has been rewarded with its strongest performance in 18 months, with sales up 1.1% in the past 12 weeks, according to data from Kantar Worldpanel.
Its market share is just down just 0.1% in the last year to 28.7%, an impressive feat given the competition. Tesco may never strike fear into the competition like it did in the old days, but at least it’s back in the ring.
Now it is the turn of Morrisons to prove it is also fit for the fight. Don’t hold your breath.