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LONDON (Reuters) - Morrisons (L:MRW), Britain's No. 4 grocer, posted another big fall in quarterly underlying sales, as competition from discounters and a move to cut prices compounded the weak overall food market.
The Bradford, northern England, based group, which trails market leader Tesco (L:TSCO), Wal-Mart's (N:WMT) Asda and J Sainsbury (L:SBRY) in annual sales, said on Thursday sales at stores open over a year, excluding fuel, fell 6.3 percent in the 13 weeks to Nov. 2, its fiscal third quarter.
That compares to analyst forecasts for a fall of 5.2 percent and a second quarter decline of 7.6 percent.
However, Morrisons said it remained confident in its full year 2014-15 profit outlook.
It now expects underlying profit before tax to be in the narrower range of 335-365 million pounds ($536-584 million) versus previous guidance of 325-375 million pounds, after 65 million pounds of new business development costs and 70 million pounds of one-off costs. It made 785 million pounds in 2013-14.
Morrisons has been losing market share to discounters Aldi [ALDIEI.UL] and Lidl [LIDUK.UL], and has also suffered after it lagged rivals in entering fast-growing online and convenience store markets.
The firm issued a massive profit warning in March and set out a plan to restore its low-price image and boost sales volumes by spending 1 billion pounds cutting prices over the next three years.
It said the third quarter showed continued progress in that plan.
Morrisons Chief Executive Dalton Philips has said he does not expect the grocer's initiatives to start to benefit its sales performance until towards the end of the second half of its 2014-15 year.
The grocer said its items per basket measure continued to improve. It was down 2.4 percent year-on-year in the third quarter, significantly better than the low of down 6.9 percent in the fourth quarter of the 2013-14 year.
Morrisons said other operational key performance indicators also showed further improvement.
The grocer now expects year-end net debt to be 2.3-2.4 billion pounds, 100 million pounds better than initially guided and 400-500 million pounds lower year-on-year.
(Reporting by James Davey; editing by Kate Holton)