British supermarket group Morrisons on Wednesday reported a halving of its third-quarter core earnings as underlying sales fell 3.1% against the backdrop of a cost of living squeeze.
The group, which has been owned by U.S. private equity firm Clayton, Dubilier & Rice for almost a year, said core earnings were £177 million ($189 million) in the 13 weeks to 31 July, down from £356 million in the same period last year.
Morrisons said the fall reflected "a number of temporary and transitional factors", some of which it expected to reverse in its fourth quarter, and a change to its year-end.
Unprecedented Inflationary Pressure
The group differs from its main rivals in that it also has its own manufacturing operations, which also experienced unprecedented inflationary pressure during the reporting period.
“It’s clear that the cost of living crisis is starting to change customer shopping patterns in many ways," said David Potts, chief executive.
"The speed, scale and severity of cost and energy price increases, exacerbated by the terrible war in Ukraine, had significant impacts through the quarter."
Monthly industry data has consistently shown Morrisons underperforming its rivals, including market leader Tesco and No. 2 Sainsbury's, and this month the group lost its status as the country's fourth-largest grocer to German-owned discounter Aldi.
On Monday Aldi reported a 79% fall in 2021 profit.
Confidence Levels Fall
Confidence levels among Britain's consumers sank to a record low this month as they struggle with the accelerating cost of living, even before the government's mini-budget on Friday sowed turmoil in the mortgage market, leading to warnings of a sharp drop in house prices.
Morrisons on Tuesday said that chief operating officer Trevor Strain was leaving the business.