A drop in Morrisons’s shares after the retailer posted its results this morning has also dragged down the value of shares in rivals Sainsbury’s and Tesco.

Morrisons’s share price has fallen by nine per cent since revealing it made a loss of £176 million for the year ending 2 February 2014, compared to a profit of £879 million the year before.

Sainsbury’s share price has fallen by 7.25 per cent, while Tesco’s shares are down by 4.52 per cent. The FTSE 100 figures were correct as of 12.18 this afternoon (13 March).

Asda, the fourth ‘top four’ retailer, is a subsidiary parent company Wal-Mart.

Business website invezz.com reported that Britain’s blue-chip index has declined today after being dragged down by grocery retailers.

Gerard Lane, from business analysts Shore Capital, told news outlet Bloomberg that UK food retail as an industry is going through significant challenges.

“You can see that looking at the extent to which underlying profits are declining at Morrisons,” he said. “These companies face a very difficult operating environment with continued focus on cost-conscious consumers. It’s very difficult for investors to see the upside for these stocks.”

The BBC reported that fears of a price war between major retailers and discounters has wiped £2 billion off the combined value of Tesco, Sainsbury’s and Morrisons shares.

BBCbusiness editor Robert Peston said: “Although the scale of what's gone wrong at WM Morrison is unusual, its woes highlight challenges faced by all mainstream supermarket groups.”

The UK’s fourth largest retailer today also warned that profits in the coming year would be less than £375 million, about half the level last year.

Morrisons CEO Dalton Philips has said that the company’s restructuring would target the market between discounters and the big four.

He added: 'The rules of the game have changed. There is a new price norm.'

Topics