Given the tough time Morrisons has had lately, a solid set of results largely meeting analyst expectations represented something of a mini-triumph for David Potts in his first annual results for the retailer on Thursday.

Morrisons even saw a tiny (0.1%) hike in fourth-quarter like-for-like sales as it announced a sales drop of 2% in the year to 31 January. Profit before tax and excluding restructuring charges and store closures stood in the middle of its previous forecast at £302m.

However, the City sent the supermarket’s shares down 2.3% by Thursday lunchtime, back to 197.3p. The share price fall meant Morrisons was down by about 5.5% since the start of the week.

The City’s reaction looks a little mean-spirited, but should be seen in context of the recent share price surge that propelled Morrisons back into the FTSE 100 last week. Before this week, Morrisons was up by about 50% since slumping to 138.6p in mid-December, and is still hovering around its highest level since March 2014. Additionally, the City was reacting to the news its dividend was being slashed by nearly two-thirds in 2016/17.

Morrisons was level-headed about its recovery, with Potts noting a “turnaround will take time and will continue to require sustained investment”. Société Générale said the sober outlook meant “rebuilding profitability will take time and the scope to further improve margins is limited”. House broker Shore Capital was more encouraged, commenting: “After a period of sustained turmoil and ultimately decline, 10 months into Potts’ reign Morrisons is in much safer hands.”

Morrisons shares had started to head south on Tuesday, losing 3.7% to 201.6p after Kantar Worldpanel research suggested it had seen a 3.2% fall in 12-week sales. The big share price winner from the Kantar data was Tesco, which climbed 1.8% to 195.2p as it continued to show an improving trend in the market share figures with its latest 12-week sales down just 0.8%. Sainsbury’s fell 1.3% to 266.9p, but the shares were back up to 269.9p by Thursday lunchtime.