NORTHERN Foods blamed changing eating habits and a price war in the biscuit market for its second profits warning in two months yesterday.

The food producer, which is based in Leeds and is best known for making Fox's biscuits and Goodfella's pizza, described sales in the past two months as very disappointing, with biscuit sales down 12 per cent in January and last month.

The company employs about 300 staff at its Dalepak frozen foods factory in Leeming Bar, near Northallerton, North Yorkshire.

Yesterday, the company announced that sales of pastry products were 11 per cent lower in the same period.

Northern said demand for certain ranges had been affected by healthier eating trends.

The company now expects profits for the year to April 1 to be about £45m, compared with £62.2m a year earlier. It also lowered profits expectations in January.

Northern, which supplies many of the UK's major retailers, including Marks & Spencer, said it was in the process of reviewing its product portfolio and cost base. It expects to report the results of the study on May 31.

The company has only recently completed a restructuring after merging 15 operating units into three divisions and closing two plants.

While the chilled and bakery divisions struggled, the company's frozen business, which includes Dalepak products, offered some comfort after it continued to perform well in the face of competitive trading conditions.

The division includes Goodfella's and San Marco pizzas, as well as Ross and Dalepak burgers.

Across the group, Northern said underlying sales were flat on a year earlier, compared with a three per cent improvement in the first nine months of the financial year.

The latest downturn reflected a weak biscuit market in the bakery division, with the sector continuing to be affected by price discounting.

Northern employs more than 20,000 people at sites in the UK and Ireland.