SUPERMARKET chain Morrisons said yesterday that it had been encouraged by recent trading after sales showed a five per cent improvement.

The group, which has been beset with problems following the acquisition of Safeway, said it was on track to have all 360 stores in its estate bearing the Morrisons brand by November.

Chief executive Bob Stott said that while much work remained to be done, the sales figures for the 25 weeks to July 24 showed the benefits of the company's Safeway store conversion process.

He said: "We are encouraged by the five per cent like-for-like sales increase. We believe this is as good as anybody, apart from Tesco, and better than many of our competitors."

Investors welcomed better news from the company following a number of profit warnings.

Yesterday's update revealed that those stores converted to the Morrisons format increased sales by 11.6 per cent in the period - 15.7 per cent higher when the period before the changeover was ignored.

Safeway stores awaiting conversion traded positively, with sales increasing by 3.9 per cent, while the core Morrisons estate showed growth of 1.1 per cent, falling to minus 2.7 per cent when fuel sales were excluded.

The company blamed the fall on the impact of nearby Safeway stores being sold to competitors.