Supermarket chain Somerfield said it remained happy with strategic progress despite seeing like-for-like sales move into negative territory.
Somerfield said the slowdown in consumer spending, the increasingly competitive trading environment and and the ongoing impact of a store overhaul programme had been among reasons for the 1.5 per cent decline in same-store sales in the second half of the financial year.
That was a reversal of a 0.6 per cent rise in the first half. The weaker performance means Somerfield saw a decline of 0.4 per cent in like-for-like sales in the 53 weeks to April 30, compared with a gain of 1.1 per cent in the 2003/04 financial year.
The group, which is the subject of takeover interest involving at least three potential bidders, has been refurbishing its estate as part of a wider focus towards capturing more of the convenience store market.
As a result, the company has added 131 new stores, closed another 91 and carried out refits and conversions at almost 200 other sites during the year. It ended the financial period with 1,308 sites - 814 in the Somerfield estate and 494 under the Kwik-Save brand.
Chief executive Steve Back said margins had remained stable during the period while recent acquisitions helped push market share for the Somerfield fascia up to 4.2 per cent.
He added: "Although trading conditions remain challenging, I am pleased with the group's progress as we continue to implement our strategic plan."
Somerfield is the subject of takeover interest from three parties thought to be prepared to pay up to £1.2 billion.
They are a consortium consisting of Icelandic retail group Baugur and property tycoon Robert Tchenguiz, United Cooperatives, and a combination of London & Regional Properties and Japanese bank Nomura.
Analysts said potential suitors were mostly interested in Somerfield's property.
Somerfield's shares closed at 199p down 1p.