Morrisons reports profit hike

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Supermarket Morrison beat forecasts with a 13 per cent rise in annual profit and dropped plans to return £500m to shareholders, saying it would invest the money instead.

Britain's fourth-biggest food retailer, which serves around 10 million shoppers a week from over 380 stores, said today profit before tax reached £637m in the year ended 1 February.

"In the current economic environment we expect the competitive landscape to be extremely challenging," it said.

Morrison has been gaining market share from rivals such as Tesco and Sainsburys, helped by its focus on low prices, innovative promotions such as a Sunday lunch for four people for £4 and its fresh food "Market Street," which includes an in-store baker, butcher and fishmonger.

The company used much of a planned share buyback for 2008-2009 to buy 38 stores from the Co-operative Group in December.

"The board also believes that further investment opportunities may arise in the medium term and has therefore decided that the capital originally earmarked for share buybacks in the 2009/10 financial year should be retained within the business to give Morrisons maximum financial flexibility," it said in a statement.

Morrison, also one of Britain's top five food manufacturers, raised its full-year dividend 21 per cent to 5.8p a share.