Supermarket group Morrisons last night revealed that Safeway's performance had continued to decline, with like-for-like sales 7.9 per cent lower in the first half.

The Bradford-based chain, which acquired the Safeway business earlier this year, unveiled pre-tax profits of £121.6m during the period, down from £131.6m last time and in line with analysts' expectations.

Chairman Sir Ken Morrison refused to comment on reports that the group was selling up to 120 smaller stores to rival Somerfield, but said he had made no secret of "testing the market".

Morrisons had already warned that profits would be affected by short-term problems integrating the Safeway estate.

Despite the continued decline at Safeway, Sir Ken said the integration was progressing well.

The core Morrisons chain delivered a strong performance, with like-for-like sales 8.9 per cent higher in the six months, while Safeway stores already converted to the Morrisons format were well ahead of expectations.

In the first ten weeks of the second half, same-store sales at unconverted Safeway sites were 10.1 per cent lower, while converted stores saw a 12.5 per cent increase.

Sir Ken said the group was due to accelerate the conversion from three stores a week to a minimum of four a week.

Although he admitted the past six months had been tough, he said: "This is an ambitious programme and one we will deliver."

The conversion programme is now expected to be completed by the end of 2005, with 41 stores converted to date.