Morrisons has reported better than expected trading over the Christmas period with like-for-likes up 0.2%. This is what the analysts said.

“Looking at the market data we can see November saw higher sales growth than December and it appears Morrisons has outperformed in both months. We estimate the reduction in the level of money-off vouchers impacted Christmas sales by 2% with price deflation running at -3.2%, implying even higher volume growth.

“Excluding online, Morrisons could achieve positive fourth-quarter like-for-likes sales in store and the fourth quarter could mark the turning point for sales depending on how Asda’s recent additional £166m per annum price investment impacts the market

“However, despite this good Christmas performance we believe that Morrisons should be more bold in its strategy and sell its manufacturing assets, or take itself private as the equity is a cheap way to access the £8bn+ of freehold store assets.” – Mike Dennis, Cantor

“It remains our argument that if Morrison can prove that it does not necessarily need to reinvest all its margin in price just to compete with the other three, by demonstrating healthy trends now, and achieve some positive volume-leverage in the next couple of years even in a flat market with ongoing gains by discounters, then margins can go up from the current c0% level to something more comparable to Sainsbury and Asda (c2.5%) and recovered Tesco (c3%).” – David Payne, Nomura

“We deem this to be an especially encouraging trading update from Morrisons, one that we believe will be warmly welcomed by long-term investors, and as such it may set the tone for an improvement in sector sentiment ahead of other trading reports from supermarket groups this week.

“We feel that an improvement in trade from Morrisons may also lead to a reassessment of the view that this is a sub-scale business than cannot compete with seemingly bigger fish”

Darren Shirley, Shore Capital

“We are also pleased for chief executive David Potts CBE that he is seeing some encouraging traction as a result of the trading and operational strategy that is now under implementation.

“In particular we feel that an improvement in trade from Morrisons may also lead to a reassessment of the view that this is a sub-scale business than cannot compete with seemingly bigger fish.

“While scale is a factor in most industries financial performance, it needs to be set against relative momentum and also capability to our minds; the latter overtime tends to be of equal if not greater importance in markets.” – Darren Shirley, Shore Capital

“Morrison’s has made noticeable progress in terms of clarity and consistency of its price proposition but faces even greater pressure in 2016 with the announcement Asda plans to spend a further £500m on price cuts. The move will undoubtedly add to an already intense price war and one Morrison’s will be unable to avoid

“Additionally, having sold its entire convenience business, Morrison’s is now under the greatest pressure to reinvigorate big-box retailing in the UK. While improving store standards, with its Back to Best program, will play a key role, Morrison’s still faces issues in terms of brand identity.

“Key to improving this this will be the direction it takes with its new marketing ad agency. With Dave Potts focusing on a return to profitability, the huge investment in marketing seen in the past is no longer a viable option.

“However, with Asda continuing to focus on value and Tesco needing to rebuild its reputation, Morrison’s has a unique opportunity to differentiate itself and win back shoppers in a turbulent retail sector.” – Simon Johnstone, Kantar Retail