Britain’s fourth biggest grocer Wm Morrison posted its lowest profit in five years, slashed its outlook and said it planned to sell off £1 billion of its £9 billion property portfolio.

Morrisons, which trails market leader Tesco, Wal-Mart’s Asda and J Sainsbury in annual sales, said underlying pretax profit in 2014-15 would be in the range of £325-375 million, which at the midpoint is more than half the level analysts expected.

The Bradford, Yorkshire-based chain is losing sales to hard discounters Aldi and Lidl faster than the rest of its “big four” rivals. It was also late in moving online and opening convenience stores, two areas of growth in a tough retail market.

“Morrisons’ key differentiator from the other members of the Big Four has always been price – and the perception that it offers the best value of the lot,” John Ibbotson, director of Retail Vision, said.

“That advantage has been badly eroded by undercutting from the true discount stores.”

Morrisons made a profit before tax and one-off items of £785 million, down 13 per cent on £901 million made in the 2012-13 year. Turnover at the group fell 2 per cent to £17.7 billion.

Chief executive Dalton Philips said the group would reduce its cost base and invest more than £1 billion in price cuts over the next three years to defend and strengthen its competitive position.