Bradford-based supermarket chain Morrisons has posted an annual loss for the first time in its history.

The company's preliminary results for the 12 month period up to January 29 this year showed a loss of £312.9 million.

The extra expenses were incurred by the £3 billion acquisition of Safeway in 2004.

Excluding the costs of the conversion of Safeway stores, pre-tax profits fell from £332.2 million to £61.5 million.

Basic earnings per share moved from 4.14 pence last year to a loss of 9.46 pence this year and the average spend per customer fell by 1.6 per cent.

Sir Ken Morrison, chairman, said: "The results we are presenting today are the outcome of an extremely challenging year for Morrisons.

"However, through this period of great change, we have built strong foundations for the company's future as a national retailer.

"We can look forward with renewed strength and energy now that we are one company with one focus - to be the Best Grocer In Town.

"The Optimisation Plan, outlined today, lays out the steps we need to take over the next three years to enable the company to apply and adapt where necessary the original Morrisons model to the new, larger business. I am confident that the plan will quickly deliver significant improvements in performance."

The company makes the first loss in their 107-year history following the £3 billion takeover of Safeway.

Sales and profitability took a battering following the takeover, resulting in the company reporting a £73.7 million loss for the half year period up to July 24, 2005.

Since then the company has installed a new finance director Richard Pennycook who has drawn up a detailed plan to slash staff and distribution costs.

The store's fortunes were seen to revive over Christmas when the store reported a 2.8 per cent rise in like-for-like sales from the previous year.

There remains widespread speculation regarding who will succeed chief executive Bob Stott, who is stepping down in the next few weeks.

There have been rumours that Sir Ken favours an internal appointment, with current executive managing director Marie Melnyk in the frame for the position.

External candidates rumoured for the position so far include Asda's Angela Spindler, Halford's Ian McLeod and WH Smith's Kate Swann.