THE UK's second-biggest supermarket chain, Sainsbury's, took another step along the road to recovery as it reported a three per cent increase in first-half profits.

Underlying pre-tax profits increased to £309m in the six months to October 13 as it reaped the benefits from a surge in sales.

Sainsbury's said better product ranges, store refurbishments and improvements in customer service were attracting more shoppers to the checkout.

Customer visits in the first half were up 6.2 per cent, with total sales 7.5 per cent higher, at £7.8bn. Like-for-like growth, excluding new stores, was six per cent.

Chief executive Sir Peter Davis said the group was making excellent progress and added that his three-year recovery programme was firmly on track.

Sir Peter joined the group in March last year to revive its fortunes and close the gap on market leader Tesco.

He has since sold off DIY chain Homebase and begun a programme to slash costs by £600m, as well as refurbishing dozens of ageing stores.

Sales at 13 supermarkets given a makeover in the first quarter are up by ten per cent, in line with the performance of others already refurbished.

Sir Peter said: "I don't think any of us would, this time last year, when we announced our recovery programme, have thought that in only a year we could have said sales are running at a record level and profits are back up again."

He said they were prepared for Christmas, but no one knew if confidence would hold up.

Sainsbury's lost its top spot to Tesco six years ago and has since been in a gradual decline, with Asda snapping at its heels.

Sir Peter said like-for-like growth was the "best sustained growth the company has delivered for over ten years".

Better buying and efficiency drives meant Sainsbury's was on track to save £150m for the full year, he said.

The interim dividend payment was being held at 4.02p per share.