Shares in WM Morrison Supermarkets PLC (LON:MRW) leapt 8% as the City welcomed further evidence of a recovery in the supermarket chain's fortunes.
The stock rose 16.4p, or 8.5%, to 210p after Morrisons said pre-tax profits in the six months to July 31 rose 13.5% to £143mln on a 0.4% fall in turnover to about £8bn.
The company had its third quarter in a row of sales rises, with second-quarter like-for-like sales increasing 2% and first-half like-for-likes up 1.4%.
It also has been cutting costs and said it now expected to top its £1bn three-year savings target by the end of 2016/17.
Underlying pre-tax profits rose 11% to £157mln. Shares in the group rose 5.3%, or 10.2p, to 203.9p in early London trading.
Hargreaves Lansdown said the higher sales and cost cuts were allowing it to improve the core business and fight competition from discounters and online rivals.
Equity analyst Nicholas Hyett said: “Morrison’s is not completely out of the woods however.
"Lower sterling will increase the costs of imported foods, and how far the supermarket is able to pass that increase on to customers remains to be seen.
"The store portfolio lacks a convenience offering and so is weighted towards the less popular superstore format.
"These could make growth hard to come by once the current round of cost cutting comes to an end."
House broker Shore Capital described the results as encouraging and modestly above its consensus forecast.
"We find it interesting that Morrisons' stock is so heavily shorted, noting that rarely in the last decade have we felt so warm towards the group’s prospects," the broker's analysts said in a note.
Morrisons has launched a restructuring drive to try to fend off the challenge from discounters and online rivals.
It has already extended and amended its online deal with Ocado, abandoned its convenience store roll-out plan and overseen a key disposal or two, with a view to cutting debt to £1.5bn and taking £1bn out of costs.
Chief executive David Potts said it was too early to know how the 'Brexit' result could affect the UK economy, although food shopping trends had not changed.
But he warned of rising costs as the plunge in the pound following the June 23 vote forced up imported food prices.
"There are some uncertainties, especially around the impact on imported food prices if sterling stays at its current lower level," he said.
"However, our priorities are unchanged, and we will continue to invest in becoming more competitive."
Potts said it had also identified further productivity opportunities beyond 2016/17 in areas such as product ordering, distribution and in-store administration.
The group achieved the first £5mln of incremental profit from wholesale, services, interest and online in the first half and said it remained confident of its £50mln-£100mln medium-term target.