Morrisons has revealed that sales slumped over the past three months as the retailer cautioned over a “very fragile and difficult consumer environment”.
It said trading was very challenging over the quarter due to inflationary pressure and “increasingly subdued consumer confidence”.
The slump in demand comes as food and drink inflation soared by 8.7% in May compared with a year earlier.
David Potts, chief executive of Morrisons, said: “These are serious times and there is further serious work ahead of us as we help customers and colleagues face into the highest inflation for 40 years.”
The company highlighted that it invested in a price reduction campaign in April which included knocking 25% off entry-level products.
Total revenues for the company moved 2.6% higher to £4.6 billion for the period against the same quarter last year.
Morrisons said this was lifted by a 54% jump in fuel sales as prices soared.
Adjusted earnings grew by £9 million to £71 million for the quarter as the firm saw profit recover in areas impacted by Covid-19 as well as cost savings.
Mr Potts said: “In a very fragile and difficult consumer environment, Morrisons has continued to deliver a resilient performance.
“This quarter traded over a period of significant Covid restrictions last year when travel and hospitality were both severely limited.
“As those two activities returned to more normal patterns this year, we saw very strong growth in fuel sales but a step back in grocery.”
Last month, Morrisons clinched a rescue deal to take over the McColl’s convenience chain.
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Bosses said in May that all McColl’s staff will keep their jobs as the firm’s shops transfer to the new owner, while Morrisons will take over the company’s two pension schemes.
