SUPERMARKET chain Sainsbury's said it was seeing early signs of improvement despite a 62 per cent slump in annual profits to £254m.

The group said same-store sales fell by 0.4 per cent in the year to March 26 but had risen 1.7 per cent during the final quarter. However, after exceptional items were taken into account, the company had profits of only £15m, compared to £610m last time.

Chairman Philip Hampton said: "While it is pleasing to be able to report that our sales performance improved towards the end of the year, these are early days and there is much to be done."

Anthony Platts, assistant director at Teesside investment managers Wise Speke said: "Sainsbury's financial figures show a hotchpotch of exceptional items as the group pushes through its business transformation programme. The underlying features are that Sainsbury has improved its range of foods, including its top-selling Taste the Difference range. The financial strength of the company has also been hugely improved, debt having been reduced by over 30 per cent."