Morrisons performed strongly in the south of England over the festive period as shoppers switched from premium retailers to its value proposition.

Morrisons reported like-for-likes, excluding petrol, up 8.2 per cent in the six weeks to January 4 and attracted an extra 2.2 million customers over Christmas.

Chief executive Marc Bolland said: “We outperformed our group figure in the South and performed strongly in London in particular. We’re seeing large numbers of shoppers switching to us and the biggest percentage are coming from premium retailers.”

He added that the increase in shoppers is an effect of the downturn but “once shoppers see our combination of fresh and value produce they are impressed”.

Total sales, excluding petrol, were up 9.4 per cent for the period, of which 1.2 per cent was a contribution from new space. Pali International analyst Nick Bubb said Morrisons’ seasonal trading period was “predictably good” and the market was expecting this to prompt an upgrade in full-year profit before tax, which didn’t occur.

He noted “energy costs were running up to£10m higher than planned for the full year” and “gross margins have taken the strain”. “Morrisons did concede that depth of promotions was 1 to 2 per cent higher, in line with the rest of the industry, so there was clearly some gross margin pressure,” said Bubb. He trimmed his pre-tax profit forecast from£640m to£630m for this year.

Bolland said Morrisons’ expansion will create 5,000 jobs this year and its head office is already “lean and mean, so we don’t need to cut down there in the bad times”. But he sounded a note of caution that the market will remain “challenging”.

Blue Oar analyst Greg Lawless described Morrisons as the “clear winner” at Christmas. He said: “The outlook is cautionary but this is a business with sales momentum and they continue to win market share.”

The completion of Morrisons’ acquisition of 38 stores from Co-op has been delayed to February because the Somerfield purchase has yet to be finalised.

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