Morrisons and Sainsbury's face more sales pressure

However, analysts believe Morrisons sales will have declined further over the last three months following a difficult Christmas. Analysts at Jefferies have forecast that Morrisons will report a 7pc decline in like-for-like sales for its first quarter excluding fuel, while Barclays have predicted a 6.3pc drop. This performance would be even worse than the 5.6pc drop over the festive season.

James Anstead at Barclays said: “Morrisons unveiled a detailed turnaround plan in March and [last Thursday] launched the first wave of price cuts.

“The plan is in many ways very sensible — but it is far from risk-free. We are especially wary of the dangers of cutting the range by 20pc and of the planned £500m cut to the cost base.

“The former risks alienating customers and the latter risks alienating staff — both will reduce the differentiation between Morrisons’ offer and that of the discounters.”

Morrisons is due to update on trading on Thursday, with Sainsbury’s reporting annual results on Wednesday.

The results will be the last presented by Justin King, who is stepping down as chief executive after a decade. Sainsbury’s is expected to post record underlying pre-tax profits of £782m, up 3.5pc on last year.

However, there are concerns about a slowdown in the retailer’s sales. Sainsbury’s reported its first fall in like-for-like sales for almost a decade in March and analysts fear it is vulnerable to a price war among the major grocery retailers, which also include arch-rival Tesco and Asda.

Sainsbury’s is expected to warn that like-for-like sales could be flat over the next 12 months.

It is, however, unlikely to follow Morrisons in committing funds to reducing prices, but is likely to warn margins could fall over the next year as it moves with the market and the demands of customers.

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