Tesco, M&S and Morrison sales disappoint A trio of Britain's biggest retailers underlined the cut-throat conditions on the high street with Wm Morrison, Marks and Spencer and Tesco all reporting disappointing Christmas trading. In an unexpected update, Wm Morrison reported dire Christmas trading, with like-for-like sales down by 5.6 per cent in the six weeks to January 5, and cautioned that full-year profits would be towards the bottom of the range, putting pressure on Dalton Philips, chief executive. Mr Philips had said in November that he expected positive trading over Christmas, after more than a year of underlying sales declines. But he admitted on Thursday that the improvements the so-called hard discounters Aldi and Lidl had made to their ranges had hurt Morrison's trade over the crucial Christmas and new year period. "Where you would have customers who may shop 11 months of the year in a discounter as their primary shop but at Christmas they trade up....this Christmas those customers who said "I'm going to trade up" didn't trade up," he said. He also said Morrison had been hurt by not having an online or a significant convenience store business and by its rivals aggressive use of vouchers. However, he denied that trading had suffered in Morrison's core stores while it concentrated on taking its stores more upmarket, as well as building its online and convenience store businesses. We are all in this challenge together. Its not about us taking our eye off the ball," he said. Our store execution was good.... I'm pushing back on that quite hard. He also said he had no plans to step down despite the deteriorating performance since he became chief executive in 2010. [We have] big strong structural challenges and we are facing into them quite aggressively. My job is to execute the programme," he said. The update sent shares in Morrison down 5.7 per cent to 239p as shares across the supermarket sector fell. Tesco, which also reported a fall in like-for-like sales, fell 3 per cent to 318p and J Sainsbury, which reported a small rise in like-for-like Christmas sales on Wednesday, was down 2.3 per cent. Beyond the supermarkets Marks and Spencer also announced a worse than expected 2.1 per cent fall in sales of clothing and homewares in its third quarter. The performance compares with analysts" forecasts that ranged from flat sales of general merchandise from stores open at least a year, to a decline of 1.5 per cent. Marc Bolland, chief executive, blamed an "exceptional, unusual and unseasonable" October together with heavy discounting on the high street. He insisted that M&S had held its nerve, despite the retailer running a series of promotions throughout the autumn. We were not the one that stirred the pot. We were the ones that clearly responded," he said. The third-quarter decline represents the 10th consecutive quarter of underlying clothing falls, despite M&S revamping its womenswear ranges in an effort to revive its fortunes. However, Mr Bolland, responding to questions about his own future, said: "It's all about the business for me, and, and I think the business is taking the right steps." M&S said like-for-like general merchandise sales rose 0.5 per cent in the eight weeks to December 24, after it promoted heavily. Concern has been rising over clothing trade at M&S after the retailer began discounting heavily before Christmas. It also comes after Mr Bolland was upbeat when M&S reported interim results in November, sending the shares up 5 per cent on the day. On Thursday, its shares rose 2 per cent to 454p. Like-for-like food sales rose 1.6 per cent in the third quarter, below the consensus of analysts" forecasts of a 2 per cent rise. However, Mr Bolland insisted the food performance was "stellar." Tesco, Britain's biggest retailer which has been battling to turn around its UK business, also said UK like-for-like sales fell 2.4 per cent in the six weeks to January 4. Brokers to Tesco had forecast a 2 per cent decrease in like-for-like sales. Philip Clarke, chief executive described the performance as "disappointing." Tesco said profit for the year would be in line with "current market expectations" but said the range had been lowered to between £3.16bn and £3.42bn. "With hindsight, we were a little too optimistic," said Laurie McIlwee, finance director. The reduction in guidance will put further pressure on Mr Ilwee, who has become a lightning rod for some investors, concerned that the group does not have a good enough handle on its forecasts. Some senior investors have been concerned that Tesco will be forced to cut prices aggressively to counter the rise of the so-called hard discounters, Aldi and Lidl, who are making rapid inroads into the UK grocery market. This could lead to a further reduction in the operating margin, from the current 5.2 per cent, already lowered in a profit warning two years ago from its historic level of 6 per cent. Mr Clarke, said: "The margin doesn't have to be 5.2 per cent forever." Source: Reuters