In the trading update the group said it is confident a broader, stronger Morrisons will continue to grow.
A Morrisons supermarket is seen in Weybridge, Britain, August 19, 2016. It will also pay out a special dividend of 4.00p.
"Nevertheless", the investment director added, "Morrison's boss David Potts and his team can look back on what they have achieved with some satisfaction, especially as they have cut net debt by so much and got sales, profits and dividends all growing again".
"This business needs to have less national duplication of merchandise and it has to have more local merchandise as we become truly integrated locally in the years ahead", he said.
Morrisons, the smallest of Britain's big four grocers, is trying to broaden its business by improving the performance of its 500 United Kingdom stores while also pursuing growth in online and wholesale markets.
The Bradford-based supermarket said on an underlying and comparative 52-week basis, pre-tax profits lifted 9.5 per cent to £374m.
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The Manufacturers Life Insurance Company lifted its position in iShares Select Dividend ETF by 75.2% in the second quarter. A number of other hedge funds and other institutional investors have also modified their holdings of the stock.
Morrisons' shares gave up early gains to be down 0.8 percent by 0925 GMT.
It further announced a special dividend of 4.00p per share.
"This will temper somewhat the excitement of the special dividend", said Bernstein analyst Bruno Monteyne.
The retail group began a programme to supply McColl's convenience stores nationwide with both branded products and the renewed Safeway brand, as well as expanding its online services, and extending the geographical reach of the "Morrisons at Amazon" partnership. While management is now guiding towards £700m in wholesale supply sales before year end, and £1bn in "due course", a continued retreat in the retail contribution to LfLs may see the need for these estimates to be raised further in order to build upon the two years' of growth now enjoyed at the group.