The City gives a mixed view of Morrisons’ 1% like-for-like slip in its first quarter.

“Disappointing, but a blip not a trend. We are not overly concerned that Morrison’s performance is slightly worse than expected. We don’t expect consensus will change very much on the back of these numbers, as – besides the fact that it is early in the year – we believe that Morrison should benefit from the ‘Summer of Love’ and has enough self help to generate decent profit growth.”

Panmure Gordon, Philip Dorgan

Morrisons’ Q1 IMS disappointed. Growing EBIT in these conditions will be very difficult, especially as voucher activity is unlikely to wane. Morrisons is in a challenged spot right now. It does not have access to the growth parts of the market (convenience and internet), and it is seeing its customer base be eroded from above and below.

“Q2 will be helped by the Euros and the Jubilee celebrations but customers continue to shift their shopping habits, promiscuously chasing the week’s best deal. Morrisons needs to find an answer to this or its LFL volumes will stay seriously negative, pressurising the rest of the profit and loss.

“The market may give the company the benefit of the doubt today on forecasts but momentum is definitely negative and we are confident that the profit before tax consensus will come down towards our £920m. The shares have had a bad start to the year, and we think the underperformance will continue.”

Oriel Securities, Jonathan Pritchard

“Whilst a poor April for the industry has clearly been an issue, we note that Morrisons’ relative performance has been mixed of late. We expect that increased couponing at Asda may have had a bearing. It is also true that peers have strengthened their produce offering, making Morrisons’ roll-out of a new, highly differentiated fresh format very timely.”

“Morrisons is the cheapest of the three quoted, the fastest growing, the least leveraged and the highest returning.”

Jefferies, James Grzinic

“Whilst the statement highlights the weak economic environment as the main cause of the LFL decline, we think there is a certain element of underperformance as highlighted by recent Kantar data.

Morrisons may be seeing a negative impact on sales from the aggressive vouchering being undertaken by Tesco and Asda but this statement from Morrisons is likely to reinforce the broadly negative sentiment towards the sector - vouchering isn’t a sustainable strategy in our view, and is clearly unhelpful for margins.

In a tough environment, we think that Morrison has the greatest scope for self-help as it continues its efficiency drive in IT, distribution etc. We also like the ongoing store trials, although management will clearly need to reassure that this strategy can draw customers in from the competition given the weak Q1 sales figure.”

Espirito Santo, Caroline Gulliver

“Morrisons’ first LFL decline since 2005 is indicative both of falling food inflation and continued pressure on consumer disposable incomes, particularly in the grocer’s northern heartlands.

“Nonetheless, the long term course which Dalton Philips has put Morrisons on seems sensible. The grocer continues to utilise the advantages of its vertically-integrated supply chain to provide products which are well-regarded in relation to quality and freshness.

“The grocer’s focus on providing fresh and good-quality products, at comparatively low prices, is helping it to differentiate from its competitors and has, to an extent, negated the need for the same level of deep promotional activity as its rivals.  Indeed, Morrisons’ fresh emphasis positions it in good stead for the long term, with fresh set to replace space as the key battleground for food and grocery market share.

Conlumino, Joseph Robinson

“Morrisons highlight a difficult market for mainstream retailers, although the focus on a 1% like-for-like drop does ignore a 1.5% increase in sales as the retailer continues to grow. The recent increases in market share for discounters like Aldi and Lidl as well as high-end retailers like Waitrose have created a “squeezed middle”, with mainstream retailers like Morrisons losing out to polarised shopping habits. That said the firm is less burdened than larger rivals having placed less emphasis on non-food lines, a factor that has contributed to Tesco’s recent problems.”

 Economic Intelligence Unit, Jon Copestake