The City is expecting solid annual results from Morrisons next week, with analysts predicting a sales increase of 2.9% to £12.5bn and pre-tax profits in the range of £300m to £330m, up from £67.6m last year.

The grocery world is also waiting with bated breath to find out the results of a strategic review undertaken by chief executive Marc Bolland, who joined the company in September.

It is believed Morrisons has been reviewing its marketing, in-store layout and online presence. The chain confirmed this week that no area of the business had been left untouched by the review. Analysts warned the retailer still had its work cut out to fully recover from the Safeway acquisition in 2004.

"Morrisons has stablilised and it is batting a bit more on the front foot," said Clive Black, analyst at Shore Capital. "Although margins are going in the right direction, they are still relatively low and there are key areas it must address." He said that Morrisons had fallen behind the competition in areas such as organics, wholefoods, Fairtrade and animal-welfare friendly products.

It would have to look at new store formats to achieve mid-term growth and develop non-food.

Another analyst said Morrisons should be setting up a team to look at an online service. But he conceded there were other, more immediate operational issues. "When Morrisons bought Safeway, it upset a lot of people by sticking to a one-size fits all format," he said. "It will now have to flex its range."