Morrisons suffered a further decline in sales during trading in the first quarter of 2014 as competition from budget supermarkets continues to hit the big players.

The Bradford-based grocer revealed today that total sales, excluding fuel, were down by 4.2 per cent and down 5.6 per cent including fuel. Like for like sales were 7.1 per cent lower, and 8.2 per cent including fuel, than the same period last year.

Chief executive Dalton Philips said Morrisons online operations, which started in March with deliveries in West Yorkshire, were performing ahead of expectations and the company was on course to have the planned 200 convenience stores by the end of the year.

Its major IT upgrade was on track which would enable Morrisons to cut costs by around £1 billion over the next three years, coinciding with 1,200 price cuts as part of a three year £1 billion price slashing programme aimed at b winning back customers.

Mr Philips said: “The plans we set out at our results in March are on track. The reaction of our customers to the 1,200 "I'm Cheaper" price cuts we announced last week has been very positive. Although it will take time for their full impact to be felt, we are confident that these meaningful and permanent reductions in our prices will enable our clear points of difference to resonate strongly with consumers.”

He said, in spite of the challenging trading climate Morrisons’ financial outlook for the full year of underlying profit before tax in the range of £325 million - £375 million, remained unchanged.