The ailing supermarket group Sainsbury's showed a further deterioration in its performance today after its third profits warning this year.
The retailer said underlying pre-tax profits for the first half would be between £125 million and £135 million, compared with £366 million last year and below City forecasts.
Sainsbury's issued the guidance in the wake of claims it had given a briefing to an analyst last week. That has prompted an inquiry by the City watchdog the Financial Services Authority.
It has been claimed that Sainsbury's gave a briefing to a Merrill Lynch analyst on Friday, in which it "helpfully pointed out" that its previous forecast was too high. This led the bank to cut its forecasts for the period.
A spokeswoman for the company confirmed it had been contacted by the FSA, but said it had made the decision to make today's statement independently.
The UK's third largest supermarket group has been losing ground over the past few years to price-cutting rivals Asda and Tesco.
Its last warning came in July, when it said profit expectations for the financial year would be "significantly" lower, and that the majority of the impact would be in the first half.
In today's statement, the group said it was not in a position to give any guidance on expectations for the full year until the presentation of a business review next week.
Richard Ratner, analyst at Seymour Pierce, said he now expected the group to post full year profits of between £240 million and £250 million. Last year Sainsbury's posted underlying full year profits of £675 million.
He said: "They are massively uncompetitive. They've got their non-food offering all wrong."
Chief executive Justin King is set to announce his plans to put the retailer back on track on 19 October.
This will reportedly involve the company slashing its dividend and putting the cash into cutting prices and improving the quality of its food.
According to the Sunday Telegraph, the annual dividend paid to investors could be cut from its current level of 15.7p to 7p.
This reduction could save the company £150 million and would mean a massive reduction in income for the Sainsbury family, which controls 35% of the group.
Sainsbury's issued its first profits warning of the year in March, blaming the impact of its continuing business restructuring. It added that price competition in the wake of Morrisons' acquisition of Safeway had made the trading environment much harder.
Shares fell nearly 3 per cent today.