The UK's fourth biggest supermarket Morrisons boasted success in a price war with its rivals today as it reported a better-than-expected rise in annual profits.
Morrisons chief executive Dalton Philips said its budget M Savers range had received a strong response and the supermarket offered "promotions that customers understood".
Tesco sparked a battle with its competitors last September when it unveiled the Big Price Drop campaign, prompting Sainsbury's, Asda and Morrisons to follow suit.
Morrisons, which has 455 stores in the UK, recorded an 8% rise in underlying pre-tax profits to £935 million in the year to January 29, as like-for-like sales excluding fuel and VAT rose by 1.8%. The City had been expecting profits of around £922 million.
The group pledged to roll out smaller convenience formats throughout 2012 after the successful trial of three stores last year, but there was still no movement on plans to sell online, which are not expected to be revealed until the end of the current financial year, which is in January.
Morrisons has been appealing to shoppers by giving away money-off vouchers for petrol while its Price Crunch discounting initiatives and new range of ready meals are advertised by former England cricketer Andrew Flintoff.
Despite the surge in profits, Morrisons has seen slowing growth in recent months with strong like-for-like sales growth in the first three quarters of its financial year fading to 0.7% in the six weeks to January 1.
Figures from Kantar Worldpanel showed the Bradford-based company's market share fell slightly to 12.2% in the 12 weeks to February 19.
Looking ahead, Mr Philips, who took over when Marc Bolland joined Marks & Spencer, said: "We know that 2012 will be tough, and we will be working hard to deliver even better value for our customers."
The group plans to spend around £1.7 million per store on revamping the supermarket's fresh food offering, after a successful trial in 12 stores in the UK.
The grocer said its store-opening plans were on track with 700,000 sq ft of space set to be opened in the current financial year, compared with 643,000 sq ft in the last year, or 37 new stores.
This will include new convenience formats - M Local - which have an average size of around 8,000 sq ft.
Morrisons has also bought stores from electronics retailer BestBuy's failed UK venture, which it will use as superstores for its Kiddicare brand, which mainly trades on the internet.
Nick Bubb, independent retail analyst, said the final results are "a bit better than expected".
He said: "The basic message is that, thanks to productivity work, profits this year will not be unduly held back by the roll-out plan for the new convenience store chain and the big expansion of Kiddicare."