Marks & Spencer supplier Northern Foods has seen sales fall dramatically while its Hull facility has been forced to close.

Northern Foods, which makes Marks & Spencer ready meals among other contracts, reported a like-for-like sale increase of 2.9 per cent, a significant drop-off in growth while its shares are currently the biggest faller in the FTSE 250.

Analysts express concern over the slowdown, worries seemingly backed up by the confirmation of the closure of its Hull ready meals plant at the end of this month - the result of the loss of a contract from Morrisons.

The company had released predictions of 15 per cent pre-tax profit growth in 2011 - a figure deemed “increasingly optimistic”.

Analysts at Panmure Gordon said: “While Northern Foods states that trading is in line with management expectations and that it expects to deliver full-year results in line with market expectations, second quarter sales growth has slowed dramatically and there are worrying indications of pressure on chilled margins.

“The shares have performed well recently, but we think the risk to forecasts has now moved to the downside.”

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