Analysts remain divided as to whether Morrisons latest trading update revealed yesterday was good news for the supermarket group.

Morrisons said that total like-for-like sales for the continuing business for the half-year to end July 24 had increased by 5%. Excluding fuel, like-for-like sales were up 2.6%.

However, the group said that it "remains comfortable" with its profits guidance issued last month of £50m to £150m, well below analysts’ expectations of £225m to £275m.

Simon Proctor, a retail analyst at Charles Stanley, said that the update “should come as something as a relief given the litany of profit warnings.”

Tony Shiret, an analyst at Credit Suisse First Boston, said: “The notion that southern people won’t shop at Morrisons is clearly not true. To achieve sales per square foot of £18.54 they have got to be doing something right.”

However, analyst Andrew Fowler from Merrill Lynch said: “It felt like things were improving a little bit but numerically we can’t prove it as Morrisons has changed the basis on which it discloses the refits’ like-for-likes and densities.”