Morrisons today reported a 1.8% fall in first quarter like-for-likes but remained tight-lipped on a potential tie up with Ocado, Retail Week summarises the City’s reaction to the update.

“Our recent visits to stores have confirmed that in-store standards look sharper (e.g. the recent launch of Nutmeg addressing a temporary merchandising gap). Our proprietary pricing work confirms the background basket remains nicely competitive. In addition, we believe that the first examples of the light version of the new Fresh Format are performing encouragingly.” – James Grzinic, Jefferies

“We think that the better marketing will have had an impact. Using Ant and Dec will have helped, but we suspect that there has been a bigger impact from the confidence that customers take from Morrisons’ vertical integration, at a time when food integrity is at the forefront of their minds.” – Jonathan Pritchard, Oriel Securities

“Today’s Q1 update is overshadowed by the continuing lack of news on the much-mooted deal with Ocado: Morrisons simply say that ‘discussions continue’ without saying what the issues are about the move into Online grocery retailing in January. As for current trading, the -1.8% like-for-like in the last 13 weeks isn’t quite as bad as the -2% expected, but it is still nothing to write home about, despite the supposed boost to the business (and its focus on food provenance) from the “horsemeat scandal”.” – Nick Bubb, independent analyst

“Morrisons continues to be a soundly run retailer and many of its current investments – particularly in relation to online and convenience – are set to leave it significantly better positioned in the medium-to-long term. However, it will continue to face short term challenges as it plays catch up with rivals.  Moreover, while the grocer is displaying greater adeptness in communicating its key points of differentiation, there is still much work to be done around strengthening price perceptions.” – Joseph Robinson, Conlumino

“Morrisons continued to under-perform its peers in the first 13-weeks of the 2013/14 financial year. However, looking at the Nielsen data for the four-weeks to the 27th April, the relative trading momentum improved to the point that the number four player in the British supermarket scene actually out-performed its Big Four rivals, albeit comparative assisted. We will, therefore, keep an eye on the near-term market share data to see if a demonstrably better course, from a performance perspective, has been entered into by Morrisons.

“Additionally, Morrison has stated that: ‘Discussions with Ocado, previously announced, continue and a further announcement will be made as appropriate’, a course that we fail to understand as being in shareholders’ interests over a proprietary approach.

“On new channels, Morrison is to some degree between a rock & a hard place. We have sympathy for Dalton Philips in this respect as he inherited a blank sheet of paper. We commend him for commencing the process of adjacent diversification to the core activities of Morrison.” – Clive Black, Shore Capital

“Morrisons has paid the price for not selling food online. However, a turnaround may be on the horizon as the grocer is poised to launch an online offering, as well as rolling out up to 100 M Local convenience stores.   

“Partnering with the likes of Ocado would certainly give the supermarket a ready-made platform for a successful online business. However, the joint venture remains a rumour and Morrisons may need to re-think its strategy if a deal is not confirmed in the coming months.” – Dan Coen, Zolfo Cooper