MORRISONS has posted a hike in annual underlying profits despite a slowdown in retail sales, while saying shoppers are buying in some household goods in a sign of consumer stockpiling ahead of Brexit.

David Potts, chief executive of the chain, said the group had seen a spike in sales of items such as painkillers and toilet roll as the UK’s fourth biggest supermarket reported an 8.6 per cent rise in underlying pre-tax profits to £406 million for the year to February 3.

The chain saw like-for-like retail sales growth slow to 0.6% in the final three months, down from 1.3% in the third quarter.

Its results showed that, on a statutory basis, pre-tax profits fell 15.8% to £320m after exceptional costs.

Mr Potts said the group saw a much more “challenging autumn as consumers were more cautious in more uncertain times”.

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However, he said the group’s turnaround was “well on track” and added that it responded quickly to the shift in consumer sentiment in the autumn as Brexit uncertainty took its toll.

He said 2018 “ended well” as a result.

Shares in Morrisons fell 1% despite the group announcing a special dividend of 4p a share, helping to boost its full-year investor payouts by 25%.

Morrisons said full-year comparable sales lifted 4.8%, up from 2.8% in the previous year, as its wholesale deals provided a boost.

The group said it was expecting to supply McColl’s remaining 300 or so convenience stores towards the end of 2019.

It is also trialling converting 10 McColl’s stores to Morrisons Daily convenience stores.

Mr Potts added that more generally the group had seen a “small amount of customers buying in” ahead of March 29 and added the supermarket was also stockpiling “cupboard fillers” to prepare for any disruption.

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It comes after a recent survey found one in 10 shoppers claims to have started stockpiling food to prepare for a no-deal Brexit.

Mr Potts said Morrisons was preparing as best it can for any potential no-deal Brexit disruption, considering alternative routes into the country in case of queues at the ports.

He also said the firm had brought forward some purchases of goods and packaging materials to support its manufacturing division.

Last week, the group also brought the Safeway brand back to the high street for the first time since 2005, with two Safeway Daily stores opened in partnership with MPK Garages.

Morrisons said it had achieved its target of £700m in annualised wholesale supply sales ahead of its end-of-2018 target and is sticking to aims to increase this to £1 billion in “due course”.

Mr Potts said the group will continue to open a “handful” of new stores each year.

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The chain was dealt a blow recently when the competition watchdog left the £12 billion mega-merger between rivals Sainsbury’s and Asda on the brink of collapse, hitting Morrisons’ prospects of snapping up any offloaded stores from its rivals.

Retail expert Clive Black, at Shore Capital, said Morrisons had notched up “further notable financial progress under the tutelage of chief executive David Potts”.

He added it was “no mean feat” in a turbulent year for retail.

Helal Miah, investment research analyst at The Share Centre, said the results show “strategies set out a few years back are paying dividends”, adding: “However, it is unfortunate for Morrisons that they are now unlikely to pick up stores from the Sainsbury-Asda merger which is looking unlikely.”