The heat was on supermarket Morrisons yesterday despite a slowdown in the pace of recent sales falls.
The latest decline in underlying sales of 1.8% was roughly in line with City expectations for the three months to May 5, after suffering a fall of 4.1% in the previous quarter.
The grocer said plans to launch an online food operation by January 2014 were “progressing” and it was continuing partnership discussions with internet retailer Ocado.
Chief executive Dalton Philips admitted the supermarket was two decades behind its competitors who have had an internet presence since the 1990s and analysts said they remained unconvinced by the chain’s performance.
In the wake of a 7% drop in full-year profits to £879 million, it emerged this week the chief executive had missed out on his annual bonus as a result of the below-par trading.
Yet, Mr Philips insisted the firm was making progress under his stewardship.
He said: “We have made a solid start to the year, with our sales performance improving since the last quarter. Our promotions have been more innovative and we are explaining Morrisons points of difference more effectively.
“These efforts were further reinforced by the horsemeat scandal which helped drive increasing customer recognition of Morrisons’ unique supply chain and approach to meat sourcing.
“They now understand Morrisons is best placed to sell food that is what it says it is. Strategically, our ambition of building a genuinely multi-format, multi-channel Morrisons is right on track.”
However, the retailer’s market share has shrunk to 11.5% from 11.9% a year earlier as it continues to suffer from the squeeze on household budgets, weak advertising and pressure from rivals.
Morrisons opened six stores during the latest quarter and acquired more than 80 sites to add to its convenience stores offering.
The firm said it expected to have 100 convenience outlets by the end of the year, with 20 opening in the first half.
John Ibbotson, director of retail consultancy Retail Vision, said Morrisons was being “consistently outpaced” by rivals Tesco, Asda and Sainsbury’s while losing customers to discount chains Aldi and Lidl.
Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers, said: “Morrisons is making slow, grinding progress, but time is not on its side.
“The company is something of a laggard in the increasingly important twin strategies of online and the convenience store format.”
“Indeed, whilst rivals continue to hone their online offerings and increase their focus on convenience stores, Morrisons is playing catch-up and this will be an increasingly difficult gap to close.”