Ken Morrison, the group's chairman and largest shareholder, said: "During the second half of the year we expect trading conditions to remain difficult and sales are unlikely to maintain the growth seen in the first six months."
The company said like-for-like sales in the six weeks since the end of the half-year rose only 0.7 per cent after rising 3.1 per cent in the first half, well below the growth seen by some of its rivals. Market leader Tesco announced on Tuesday with its half-year results that current sales were climbing 7.5 per cent after a 7 per cent rise in its first half.
The first-half sales rise, which took turnover through the pounds 1bn barrier for the first time, led to profits of pounds 55.2m, up from pounds 51.1m in the first half of 1995. The interim dividend rose 18 per cent from 0.275p to 0.325p.
Mr Morrison said: "Trading conditions have been some of the most demanding for many years. It is the first time in 20 years that the company has no new store openings and with ever increasing competitor activity, the petrol price war and the BSE scare the group has performed well to produce an increase in turnover of 9.3 per cent."
The difficulties facing Morrison underlined the pressure being put on all supermarkets by the aggressive bid to take market share being launched by the industry's first-tier players, Tesco, Sainsbury, Safeway and Asda. Last week Tesco launched a new initiative, dubbed "Unbeatable Value", which promised a double refund if customers find cheaper products in any other store.
Despite the pressure, Morrison said it was pressing ahead with a pounds 100m expansion plan which would see four new superstores opening in 1997. There will also be eight refurbishments, continuing the programme under way in the first half. Morrison had 81 stores with a total retail space of 2.9 million square feet at 4 August and operates 60 petrol stations.
Analysts said it was not clear whether the sales growth slowdown was due to refurbishments or competitive pressures.
"One concern is a decline in growth in the core business but how much of that is due to the refit programme is difficult to know," one analyst said. Profits are expected to hit pounds 135m for the full year. The shares closed 0.5p lower at 159.5p.Reuse content