In another sign of just how hard the UK’s big grocery retailers are finding things right now, Morrisons has lost its place in the FTSE100, it was announced on Wednesday night.
The supermarket, which is Britain’s fourth largest by market share, has been struggling to compete in the super competitive grocery market, and the demotion to the FTSE250 reflects a share price drop of nearly 50% since late 2013, and more than 17% so far in 2015.
The struggles of the British supermarket sector right now are pretty well documented. Aldi and Lidl, the two German discounters, are continually stealing market share from the big, established retailers, while online grocers like Ocado and Amazon Fresh are providing competition from a totally different direction.
The most recent data provided by major retail analysts Kantar World Panel showed that the German supermarkets now have a combined 10% of the UK’s grocery market, and are consistently robbing all the big supermarkets, excluding Sainsbury’s, of market share.
Morrisons is finding the changes particularly difficult to adjust to though, and it has seen its market share fall by 0.5% so far in 2015, according to Kantar’s data.
Alongside dropping market share, sales for the company are also doing terribly. Morrisons’ like-for-like, and total sales have both fallen in every quarter in 2015. In its most recent update, sales had fallen by 2.6% in the three months to November.
At the time, chief executive David Potts gave a pretty lukewarm response to his company’s results, saying:
The business is moving at pace on the long journey towards improving the shopping trip for customers. Our priorities for the rest of the year are unchanged – to stabilise trading, reduce costs and further improve the capability of the leadership team. We are making good progress in many areas and customers are noticing improvements.
Morrisons’ troubles in recent years have been compounded by the failure of their convenience stores. M Local — first created in 2011 as a competitor for Tesco Express and Sainsbury’s Local — was an unmitigated disaster for the company, and Morrisons were forced to sell the 140 stores to private investors for just £25 million ($37.3 million) in September. All 140 of the stores were making a loss.
It is expected that the demotion will mean that shares in the company are sold off by big tracker funds, the BBC reports. So far though, investors don’t appear to be too worried about the demotion, and shares are up around 0.7% in early trade on Thursday morning.
Along with Morrisons expulsion from the top table of British shares, both G4S, the security company, and Meggitt, which does aerospace engineering, have also dropped into the FTSE250.
The demoted companies will be replaced by WorldPay, Provident Financial, and Irish investment firm DCC.
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