Morrissons’ move could turn into “bloody war,” says analyst

By Mike

Speaking with the Guardian, Altium Securities’ David O’Brien reckons that Morrissons’ decision to slash prices is a shot across the bows of supermarket competitors in the UK.

“The opening salvo is what could turn out to be a very bloody war,” said O’Brien in a seller’s note.

“Game Group has a price promise and as a result will be forced to match the levels offered by the food retailer,” he went on. “We think it highly likely that other retailers will follow suit in the run-up to Christmas, resulting not only in Game Group being forced to price match but also to increase its promotional spend in the press and on TV.

“Our expectation is that little help will come from hardware sales, as Microsoft has just reduced the entry price of the Xbox 360 to USD 199 (GBP 115), with Sony likely to follow suit.

“We think the above combination is likely to result in a reining in of profit estimates closer to Christmas.”

More through the link. Thanks, GI.

By Mike Bowden