The company had warned that profits would dip

Finance director Martin Ackroyd has faced criticism for the group's problems since the Safeway takeover and for the timing of its profit warnings.

The most recent warning came last week, just six days before its results.

Pre-tax profits after one-off costs for the year to 30 January fell to �281.1m ($530m) from �305.1m a year earlier, Morrisons said.

Chairman Sir Ken Morrison told the BBC that despite the problems the company had had in integrating Safeway, there wasn't a huge difference between the expectations of Safeway and Morrisons' shoppers.

"Generally speaking, the basic commodities that sell are fairly simple and fairly common," he said.

"In spite of what people might think about us being Northern hicks, we do have a big range of products."

Profits before exceptional items came in at �320m, in line with the group's profit warning last week.

Mr Ackroyd will stay in his current position until a replacement is found.

Reshuffle

Morrisons had warned that following a "review of Safeway supplier balances and... issues encountered with the Safeway accounting systems during 2004" its earnings would be �40m lower than expected.

This was the second profit warning since Morrisons bought Safeway for �3bn last year, sparking doubts among analysts about the management of the UK's fourth-largest supermarket chain.

In spite of what people might think about us being Northern hicks, we do have a big range of products Sir Ken Morrison, Morrisons chairman Check Morrisons' share price

Last week, Mr Ackroyd faced calls to quit for releasing a warning so close to the company's final results.

Numis Securities analyst Iain McDonald said his departure was "unsurprising".

Mintel retail analyst Neil Mason added: "The merger was massive in terms of scale so it is no surprise that there have been problems.

"Mr Ackroyd had faced pressure from the City and it was inevitable that there would be changes, so maybe he feels now is a good time to go."

Joint managing director Bob Stott was also named as the group's first chief executive, while independent director David Jones - who joined Morrisons from Next last year - will become its first deputy chairman.

Other changes include the departure of non-executive director Duncan Davidson.

'Good progress'

Despite the fall in profits, the group was upbeat about current trading.

1. First Safeway bid 2. Second Safeway bid 3. Seals Safeway takeover 4. Poor Safeway sales warning 5. Warning over Safeway takeover costs 6. Full year results

Mr Morrison said results at converted stores had been "encouraging", leaving the group confident of significant improvement by 2007.

In the six weeks to 13 March, like-for-like sales rose by 2.7% at its core Morrisons stores, by 13% at its converted Safeway stores and by 1.2% at its unconverted Safeway sites.

The company has had "a bout of indigestion", said Edward Whitefield, chairman of retail strategists Management Horizons Europe.

"I'm sure that Ken Morrison has the full support of his management team and that they will ride out this storm quite successfully."

Meanwhile, the Office for Fair Trading has said it is referring rival chain Somerfield's purchase of 114 Safeway stores to the Competition Commission.