Shares in Big Food Group, the retailer formerly known as Iceland, have plunged after it warned investors its profits will be hurt by falling sales.

The retailer has blamed its aggressive promotional strategy for falling sales in recent weeks.

This strategy had included ' buy one - get one' free deals, which the group now wants to stop, in favour of introducing 'permanently' lower prices.

The company now expects to post an operating loss of about �8m for the six months to September. This compares with an operating profit of �8m in the same period last year.

Shares fell 31p to 62p in morning trade.

The company has embarked on a four year recovery programme, in part because of its disappointing entry into the organic food market.

"Whilst the direction of the change is consistent with the Group's strategy, the pace and extent of the repositioning has clearly been greater than our customers would have liked," said the group.

Customers stay away

The result has been an 8.3% drop in like-for-like sales at core Iceland outlets, in the three weeks since 28 June.

The company's second chain, Booker, reported a 1.9% fall in like-for-like tobacco sales in the same period, while non-tobacco sales were up 3.3%.

These falls show a worsening sales trend since the group's first quarter update earlier this month - when it reported a 5.3% fall in Iceland like-for-like sales and Booker posted a rise of 0.9% for the 13 weeks to June 28.

However, the company insisted that its refurbished outlets were producing better results.

"The performance of the new concept stores continues to be encouraging for the long term strategic outlook," it said.

Big Food announced in May that it was spending �80m on Iceland stores refits, new store openings and the launch of a home delivery service.