SUPERMARKET price wars, together with increased advertising costs, will lead to annual profits falling below expectations, J Sainsbury warned.

The warning accompanied news of strong trading in the first four weeks of the second half of the financial year and record trading in the pre Christmas week when sales broke all company records by a significant margin.

But the group said: "Our commitment to enhancing customer service and price competitiveness, together with increased advertising, will reduce profit in the current financial year below earlier expectations."

It emphasised that the contribution of new supermarkets to sales growth had been affected by a reduced number of new stores and a phasing of opening dates.