FRESH signs that supermarket chain Safeway may be losing out to its rivals have been provided in a disappointing trading update from the group.

The retailer said sales in the fourth quarter of its financial year rose by 4.1 per cent on a like-for-like basis, with overall growth at 4.5 per cent.

But stripping out a 0.6 per cent bonus from the earlier Easter, underlying like-for-like growth was 3.5 per cent, far behind market leaders Tesco and Sainsbury.

Safeway said it was "satisfied" with the performance, given the upheaval at its stores resulting from chief executive Carlos Criado-Perez's revival strategy.

About 100 stores have been touched up or refurbished in recent months.

The group has introduced a mixture of features into its sites, from fresh food counters and noodle bars to dry cleaning and photo processing shops.

In a statement to the stock market the retailer said: "Safeway has completed a successful year of transition."

A spokesman said the upheaval programme had an effect on performance through the disruption caused to stores while refurbishing work was carried out.

About 25 per cent of Safeway's store portfolio has been overhauled under the second part of Mr Criado-Perez's turnaround strategy at the chain.

Stores have been given a variety of fresh food counters while dry cleaning and photo processing shops have been introduced on some sites.

The spokesman also said that sales had been hit by the delayed opening of four hypermarkets, which would have extended selling space by two per cent.

Four stores - in Glasgow, Rushden, Northants, Milton Keynes and Gamston, near Nottingham - had been expected to open in March, but they will now open either next month or in June.

The spokesman said the group had wanted to take more time to learn the lessons from its first hypermarket, in Plymstock, Devon, which opened before Christmas.

Safeway is due to report its full-year results on May 15 and analysts are expecting pre-tax profits of about £350m.