LONDON (Reuters) - Morrisons (L:MRW) posted a surprise rise in sales over the festive period, as Chief Executive David Potts ended three years of declines in his first Christmas in charge of Britain's fourth-largest supermarket.
The rise in like-for-like sales confounded market expectations of another fall as retailers battled for customers over Christmas. Spending over the period recorded its weakest growth in more than a year, data showed on Tuesday.
Potts said he was pleased with the improved trading performance.
"While there is of course much more to do, we are making important progress," he said.
The Bradford, northern England, based group, which trails market leader Tesco (L:TSCO), Wal-Mart's (N:WMT) Asda and Sainsbury's (L:SBRY) in annual sales, said on Tuesday sales at stores open over a year, excluding fuel, increased 0.2 percent in the nine weeks to Jan. 3.
That compares to analysts' average forecast of down 2 percent and a third quarter decline of 2.6 percent.
Morrisons forecast full year 2015-16 underlying profit before tax to be in the range of 295-310 million pounds ($429 million-$450.24 million) before 60 million pounds of restructuring and store closure costs.
Morrisons has not reported positive like-for-like sales since 2012. Last month the firm was ejected from Britain's FTSE 100 blue chip index.
Former Tesco executive Potts joined as chief executive in March, tasked with reviving Morrisons' fortunes. But he warned in September it would be a "long journey".
Like its rivals Morrisons is engaged in a price war to stem the loss of shoppers to discounters Aldi [ALDIEI.UL] and Lidl [LIDUK.UL] and is also grappling with commodity-driven price deflation that shows little sign of abating.
Prior to Tuesday's update analysts were on average forecasting 306 million pounds, versus 345 million made in 2014-15.
The firm said it was entering into consultation to close a further seven supermarkets.
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