SUPERMARKET group Morrisons posted the first loss in its 106-year history yesterday after it was hampered by the cost of integrating Safeway.

The Bradford-based group said the conversion of Safeway stores to the Morrisons format cost £90.7m in the 25 weeks to July 24, contributing to it plunging £73.7m into the red.

It also warned full-year results would be at the lower end of guidance and revealed trading had worsened at its core Morrisons stores.

Morrisons, which began life as an egg and butter merchant in 1899, has been beset with problems since its £3bn deal for Safeway last year. The takeover made Morrisons into the fourth-biggest food retailer in the UK but has led to a string of profits warnings.

Same-store sales at the core Morrisons estate fell 0.6 per cent in the past 12 weeks, or 5.2 per cent excluding fuel, a deterioration on the first half and worse than analysts had predicted.

The decline was due to the impact of some nearby Safeway stores being sold to competitors as part of the regulatory requirements following its £3bn acquisition of the chain last year.

In contrast, Safeway outlets converted to the new format showed an improvement in like-for-like sales, up 13.7 per cent including fuel in the past 12 weeks. This left overall same-store sales up 5.4 per cent. The conversion is due to be completed by the end of this year.