Sainsbury’s - which also owns the Argos chain - said sales of groceries rose 0.4 per cent and online groceries trading jumped 7.3 per cent, but this was offset by a 3.9 per cent fall in general merchandise.
Its third quarter performance saw sales declines worsen from the 0.2 per cent drop in the previous three months.
Mike Coupe, chief executive of Sainsbury’s, said: “We gave our customers a great combination of quality food at good prices this Christmas and we delivered a standout performance operationally.
“We have a real sense of momentum in Sainsbury’s and investment in our stores and improvements to service and availability have led to our highest customer satisfaction scores of the year.
Clothing sales grew by 4.4 per cent while total online sales grew by 5 per cent at the business.
Mr Coupe said: “Our digital investments are also paying off and over 20 per cent of our business was online in the quarter.
“Groceries online had record order numbers throughout the Christmas period and customers are increasingly choosing to shop with SmartShop in our supermarkets.
“Argos had its biggest digital Black Friday to date and record sales through mobile and via Argos Click and Collect1. 32 million customers shopped with us across Sainsbury’s and Argos in the key Christmas week.
“The colder weather helped to deliver strong clothing sales in the quarter and our Christmas, party and gifting ranges were all popular with customers.
“Argos outperformed the market in consumer electronics, but the toy and gaming markets declined year on year.”
Sainsbury’s said that retail markets remained highly competitive and that the promotional and consumer outlook continues to be uncertain.
However, the supermarket reiterated well placed to navigate the external environment.