Morrisons, the UK’s fourth-largest grocer, today (12 September) reported a fall in first-half profits as underlying sales again fell – but a move to scale back its capex plans helped boost its shares.

The retailer booked a 10% drop in underlying profits to GBP401m for the six months to 4 August.

Turnover was flat at GBP8.9bn and Morrisons said total store sales inched up 0.8%. However, like-for-like sales came under pressure, falling 1.6%.

In recent quarters, Morrisons admitted its sales suffer after misfiring advertising and loyalty programmes that failed to hit the mark. A new ad campaign and loyalty schemes, including money-off coupons, have slowed the decline – first-quarter like-for-likes were down 1.8% – but analysts said the improvement was less than the market expected.

However, a decision to cut capital expenditure budget for the next financial year – and an increase in the dividend – pushed Morrisons’ shares higher. At 10:07 BST, the stock was up 3.43% at 307.4p.

The retailer plans to continue expanding its convenience store estate and upping the number of its core outlets that include its “fresh format” fresh food proposition. It is also set to launch online grocery in January in a venture with Ocado.

However, Morrisons said it was reducing plans to open new supermarket space.

“Our strategy for growth in convenience and online is now set. Today we are outlining our financial strategy, which will support our key financial objectives of growing underlying earnings, generating cash and delivering superior total shareholder returns,” CEO Dalton Philips said.

Click here for coverage of Morrisons’ media conference held in the City after the results were published.

Click here for coverage of the City’s view on the numbers.

Click here for the full stock exchange announcement from Morrisons.