Morrisons’ chief executive Dalton Philips said he is absolutely committed to delivering the grocer’s “big, bold” turnaround strategy despite reporting the worst half year results since the dark days of Morrisons’ troubled takeover of Safeway 10 years ago.
Mr Philips said: “There is a real sense the business is getting back on the front foot.
“There are positive early signs that the changes at Morrisons are beginning to resonate with customers.”
A £1bn self-help programme has lowered prices, cut promotions by 13 per cent, slashed management roles and removed 2,000 product lines that were seen as surplus.
As it warned earlier this year, these moves led to a 51 per cent slump in first half profits to £181m in the six months to August 3.
Like-for-like sales fell 7.4 per cent although industry data from Kantar suggests customers are returning to the chain after the price cuts lured back shoppers who had migrated to discount rivals Aldi and Lidl.
“When we can narrow the gap with the discounters, the opportunity for other points of difference to shine through become immense. We’ve got 10 times their range,” said Mr Philips.
Asked when the new initiatives will start to benefit sales and profits, he estimated that the Bradford-based chain should see progress by the end of the second half.
“We’re growing ahead of the market on produce and meat. In terms of items per basket it’s still a negative number, but we’re trying to get people to shop more,” he said.
He pointed to new data which shows that items per basket fell seven per cent over the winter, but in May, June and July they were down three per cent, indicating an improving trend.
Morrisons has pledged to invest £300m in price cuts during 2014/15, including its “I’m Cheaper” campaign, which cut 1,200 products by an average of 17 per cent.
A further 135 prices were reduced by 14 per cent in June.
Morrisons has been hit by its lack of convenience stores and online presence, the two fastest growing sectors of the grocery market, but it is catching up rapidly with rivals.