Morrisons has ended its run of 14 consecutive quarters of growth by posting a 1.9% fall in sales in the three months to August 4, but bosses insisted the turnaround remains on track.
The supermarket also revealed it has deepened its relationship with Amazon, signing a long-term partnership "over a number of years" to explore "new opportunities". Sales at Morrisons for the six months to August 4 fell 0.2% on a like-for-like basis while total sales - including fuel - rose 0.4% to £8.83 billion.
Profits before tax and one-off costs were up 48.5% to £202 million and bosses also revealed they would pay out a special dividend to shareholders.
David Potts, chief executive, said: "We stayed focused on our fix, rebuild and grow strategy, and were pleased to maintain the momentum of the turnaround against strong comparatives last year. Sales and profit progress was robust and we again invested in improving our competitiveness for customers."
Arlene Ewing, investment manager at Brewin Dolphin, said: “The interim update from Morrisons follows an ongoing pattern of annual like-for-like sales growth, however an underwhelming increase of just 0.2% shows there is a long way to go to match the overall 2018/19 growth of 4.9%. While the supermarket is making headway with its wholesale supply offering both in the UK and overseas, it faces ongoing pressure from discounters, such as Aldi and Lidl, who are competing for the retail market share alongside the big four.
"Brexit uncertainty continues to impact on consumer sentiment across the sector, but Morrisons’ recent expansion of its partnership with Amazon shows a clear focus on becoming a major player in online groceries, which could help to boost its performance before the end of the financial year.”
