Morrison to top growth league

LONDON (Reuters) - Wm Morrison Supermarkets is set to post a 19 percent rise in first-half underlying profit on Thursday and confirm it is taking market share from bigger rivals as cash-strapped shoppers flock to its lower price stores.

Britain's fourth-biggest supermarket group is also expected to confirm plans to return 500 million pounds to shareholders both this fiscal year and the next, despite having only bought about 10 percent of this year's tranche so far.

Analysts say the buyback could help underpin Morrison's shares as it faces more demanding sales comparatives in the second half of the year.

Morrison is set to report profit before tax and one-off items of 294 million pounds for the 26 weeks to August 3, according to the average forecast of 8 analysts polled by Reuters. Estimates range from 284 million to 305 million.

Like-for-like sales excluding fuel, a key industry measure, are forecast to climb 7.2 percent in the second quarter, boosted by higher food prices as grocers pass on the rising cost of commodities such as meat and dairy products.

Estimates range from 6.5 percent to 8 percent, and compare with 7 percent growth in the first quarter.

Industry data from TNS and Nielsen show Morrison continues to outperform the overall grocery market, although perhaps not by as much as earlier in the year.

The group is, after several integration problems, feeling the benefit of its purchase of rival Safeway in 2004 as well as its "Refresh" campaign to revamp stores and its image as a lower-priced alternative to some of its rivals.

Cash-strapped Britons are trading down to cheaper stores amid higher fuel and food costs, as well as sliding house prices.  Continued...