Supermarket group Morrisons posted the first loss in its 106-year history yesterday after it was hampered by the cost of integrating Safeway.
The group said the conversion of Safeway stores to the Morrisons format cost £90.7 million in the 25 weeks to July 24, contributing to it plunging £73.7 million into the red.
It also warned full-year results would be at the lower end of guidance and revealed trading had worsened at its core Morrisons stores.
Morrisons has been beset with problems since its £3 billion deal for Safeway last year. The takeover transformed Morrisons into the fourth-biggest food retailer in the UK but has led to a string of profits warnings.
The firm conceded in May that costs associated with integrating the two businesses were likely to remain higher and take longer to eliminate than hoped.
Same-store sales at the core Morrisons estate fell 0.6 per cent in the last 12 weeks, or 5.2 per cent excluding fuel, a deterioration on the first half and worse than analysts had predicted.
The decline was due to the impact of some nearby Safeway stores being sold to competitors as part of the regulatory requirements following its £3 billion acquisition of the chain last year.
In contrast, Safeway outlets converted to the new format
showed an improvement in like-for-like sales, up 13.7 per cent including fuel in the last 12 weeks. This left overall same-store sales up 5.4 per cent. The conversion is due to be completed by the end of this year.
Earlier this year, Morrisons said annual profits before exceptional items would be between £ 50 million and £150 million. Yesterday it steered investors towards the lower end of this range.
However, shares lifted amid relief that it had given some clarity about its trading figures after months of uncertainty.
Ingrid Boon at Investec Securities said the sales figures for the core Morrisons stores were worse than expected.
Announcing the results on his 74th birthday, chairman Sir Ken Morrison said he wanted to remain with the company for the foreseeable future. He said he hoped to stay as long as he was " competent and of use to the business".
He said: "I still enjoy the job which is one of the things that makes me want to stay."
He also said it would be a "bit much" for chief executive Bob Stott and him to go at the same time.
The group said it was replacing deputy chairman David Jones on its audit and remuneration committees.
Mr Jones, who announced on Wednesday that he was retiring as deputy chairman of Next, was appointed to the Morrisons board last spring following the supermarket's takeover of Safeway.
The pretax losses compared with profits of £121.6 million last year. Before £118.8 million of exceptional costs - mostly due to the cost of converting Safeway stores to the Morrisons format - operating profits were £50.7 million against £168.9 million last time. Shares closed up 31/2p at 1701/2p.