Supermarket giant Morrisons has reported a significant uplift in sales over the crucial Christmas trading period, demonstrating resilience in a fiercely competitive market. The UK's fifth largest grocery chain revealed a like-for-like sales increase of 3.4% for the six weeks ending January 4, marking a notable improvement in performance.
Festive Performance Highlights
The festive sales jump represented an acceleration from the full-year trading figures, where like-for-like sales had grown by 2.8% in the period to October 26. This growth had slowed to 2.4% in the final quarter before the Christmas surge, making the holiday performance particularly noteworthy for the retailer.
Drivers of Growth
Morrisons attributed much of its success to exceptional demand for its own-brand premium range, which saw sales skyrocket by 17.4% during the festive season. The supermarket's non-food offerings also performed strongly, recording a 10% increase, while clothing sales rose by 4.7% over the Christmas period.
Chief Executive Rami Baitieh commented on the results, stating: "In a year when consumers were feeling the squeeze, we grew like-for-like sales for a 12th consecutive quarter, maintained EBITDA and our market share." He emphasised that the figures demonstrated the company's resilience against challenging external factors.
Challenges and Cost Pressures
Despite the positive sales performance, Morrisons faced significant headwinds throughout the year. The company reported that underlying earnings remained flat at £835 million, with rising costs and a cyber incident impacting profitability. The IT systems outage, which occurred just before Christmas 2024, affected product availability during a critical trading period.
Government measures introduced in the 2024 budget, including April's national insurance contributions tax hike and minimum wage increase, contributed to costs surging by approximately £200 million in the past financial year. These external pressures created substantial challenges for the supermarket chain.
Cost Reduction Success
In response to these challenges, Morrisons implemented aggressive cost-cutting measures, achieving savings of £233 million in the year to October 26. This brought the total savings to date to £845 million, with the company expecting to exceed its £1 billion target by the end of the 2025-26 financial year.
Chief Financial Officer Jo Goff explained: "We worked hard during the year to offset the significant and unexpected cost headwinds arising from the Government's 2024 budget and other inflationary pressures." The company also reduced its debt by another 10%, bringing total debt reduction to 46% from its 2022 peak.
Market Position and Competition
Despite the positive Christmas trading, recent industry data from Worldpanel indicates Morrisons' market share slipped slightly to 8.5% in the 12 weeks to December 28, down from 8.6% a year earlier. This development comes as the gap with rival discounter Lidl continues to narrow, with industry experts suggesting the German retailer could potentially overtake Morrisons in the coming months if current momentum persists.
Future Strategy
Looking ahead to 2026, Morrisons remains focused on maintaining its competitive edge in the grocery market. The company has announced a further 2,500 price cuts at the start of January, reinforcing its commitment to delivering value for customers. Baitieh added: "We had a good Christmas in 2025, providing a solid foundation for the first quarter. As we enter 2026, the grocery market remains competitive and we are committed to our focus on delivering good value and keeping prices low for customers."
The supermarket, owned by US private equity firm Clayton, Dubilier and Rice, continues to navigate a challenging retail landscape while maintaining its position as one of Britain's leading grocery chains. The Christmas performance provides encouraging momentum as the company faces ongoing competitive pressures and economic uncertainties in the year ahead.
