Shares of Bradford-based supermarket group Morrisons rose about 3% on Thursday after it produced a positive quarterly trading update and became the subject of speculation on further merger consolidation in the frenzied UK supermarket sector.
Morrisons said its group like-for-like (LFL) sales excluding fuel were up 3.6% in the 13 weeks to May 6.
Sainsbury’s has agreed to buy Walmart’s Leeds-based subsidiary Asda for about £7.3 billion in cash and shares to create the UK’s largest supermarket group by market share and overtake Tesco.
If the deal is approved by regulators, Morrisons would become the UK’S No. 3 supermarket chain, but it would be roughly a third of the size of Sainsbury’s-Asda and Tesco.
Morrisons CEO David Potts declined to comment when asked by reporters if Morrisons would consider its own bid for Sainsbury’s or pursue a business relationship with Amazon that goes beyond an existing wholesale deal.
In its trading statement, Morrisons said: “We are now open for business as a wholesaler, and started supplying our new partner McColl’s through a rolling programme of around 25 stores per week during the first quarter.
“These stores receive a full fresh, frozen and ambient offer from Morrisons, comprising both brands and the new Safeway range.
“In addition, we are supplying some McColl’s stores with tobacco and some ambient products slightly earlier than we initially planned.
“Overall, all our wholesale supply initiatives contributed 1.8% to Group LFL, and we are on track for our targets of £700m of annualised sales by the end of the year and £1bn in due course.”
In its outlook, Morrisons said: “Our expectations remain unchanged and we are confident of another strong year ahead.”
Morrisons CEO David Potts said in the trading statement: “We are pleased to have made a strong start to the year, again becoming more competitive for customers while delivering growth on growth.
“We expect to continue to improve in the year ahead.
“During a busy period of exciting new ranges, new store openings, strong supermarket and wholesale growth, and the peaks and troughs of the seasons, our colleagues once again did an outstanding job for customers.”