Somerfield chief executive Paul Mason has played down rumours the chain is poised for an imminent sell-off, insisting instead that the current owners had significant investment plans for the coming year.

There has been conjecture about a possible sale of the company since March, when chairman John Lovering told a journalist he was waiting for someone to come up with "a big enough bag of money" to buy it.

But this week Mason moved to quash this speculation, telling The Grocer: "Somerfield is surrounded by rumours but we have absolutely no plans to sell." The retailer had significant investment plans for the coming year, he said, with more than £100m secured to open 50 new stores, to complete the redevelopment of 100 Texaco forecourts as Somerfield sites, and to improve existing shops.

A refinancing programme was also in the pipeline to allow Somerfield to pay off its £1.31bn debt and facilitate a shareholder pay-out.

Mason was speaking as Somerfield unveiled sales of £4.37bn for the 2006/2007 financial year, down 4% year-on-year. EBITDA rose 38% to £218m over the period.

He said the fall in sales - which came as TNS Worldpanel data revealed Somerfield's market share slipped from 4.2% to 3.8% in the 12 weeks to 15 July - was mainly the result of targeted store closures.

The chain now has 955 stores, after shutting 180 that were considered too large for its market positioning as a high street grocer. Stores now average 7,000 sq ft. "We have lost a significant amount of trading space and we have exited loss-making non-food categories such as electricals," said Mason.

"I'm pleased with the performance and we are achieving our targets in terms of sales and profitability."

Mason said Somerfield planned to go head-to-head with Co-op stores.

"We are no longer going to be Britain's number five supermarket - we will be its number one local grocery shop," he said.

"We will have the best availability of any local shop, and the best range of fresh produce. We have more buying strength in this category than the Co-ops do.

"We still have a supermarket's ability to leverage fantastic promotional offers and our staple items are price-matched with Tesco."

Somerfield now plans to introduce a reduced but rejuvenated range of meat, dairy and bakery into all of its stores, having trialled the ranges in 60.

Meanwhile, the only non-food on offer will be greetings cards, CDs and DVDs.