Supermarket group Sainsbury is planning to extend its cost-cutting programme as it tries to catch up with rival Tesco.
Its profits before tax increased by 17% to £667m ($1.1bn) in the last year, but sales in stores open more than a year rose by only 2.3%.
"We have made sound progress and continued to deliver on our promises during the past year despite increasingly tougher market conditions," said group chief executive Sir Peter Davis.
But investors were concerned that there were no reassurances about the company's future performance.
By 0822 GMT Sainsbury's shares were 5% down at 252.75p.
In a conference call Sir Peter told reporters: "We've clearly seen a market over the past four or five months that has slowed down.
"Customers have become a bit more cautious - it's still growing, but it's more cautious."
The firm warned that there would be some tough
comparisons in the next set of sales figures because last year the Football World Cup and the Queen's Golden Jubilee boosted sales.
Sir Peter said the company had made significant achievements in modernising the business.
Since the cost savings programme was launched, £460m of savings had been made; £250m would be saved in this financial year and a further £250m in 2004/05.
The group announced in April that it was creating 10,000 new jobs to cut queues at checkouts - in an update it said all the jobs would be filled by June.