SUPERMARKET group Morrisons warned of further profits disappointment after continuing to experience problems integrating its Safeway acquisition.

Morrisons said annual profits before tax and one-off items would now be in the range of £320m and £330m - about £30m to £40m lower than analysts had expected after its Christmas trading update.

The Bradford-based group, which acquired Safeway last year, said the shortfall followed issues encountered with the Safeway accounting systems. It is the second time in less than a year that Morrisons has warned on profits.

Morrisons said no further comment would be made until its full-year results next week, when it will give an update on the outlook for the financial year, including the Safeway conversion process "in an increasingly competitive marketplace".

Morrisons has been converting Safeway stores to its own format since acquiring the chain last year.

Although sales at the original Safeway stores have continued to decline, the group has reported encouraging progress at those sites converted to the Morrisons format.