Sainsbury's Christmas sales beat forecast

Sainsbury, which has overtaken Leeds-based Asda to become the second-biggest supermarket in the UK, according to reports, said sales at stores open over a year rose 3.6 per cent, excluding fuel but including VAT sales tax, in the 14 weeks to January 8, its fiscal third quarter.

"The business continues to perform well in a challenging consumer environment, as customers are faced with fuel and VAT increases, combined with uncertain employment prospects," Sainsbury said.

Market researcher Kantar Worldpanel said yesterday Britain's grocers benefited from severe winter weather in December as consumers cut their number of shopping trips and bought many non-food goods alongside their food.

Sainsbury said sales of its non-food ranges grew at three times the rate of food over the period.

Excluding VAT sales tax, Sainsbury's underlying sales growth is likely to have been around 2.8 per cent.

That would be ahead of the one per cent increase posted by industry No.4 Morrisons for the six weeks to January 2 and above the 0.9 per cent rise in underlying UK sales analysts expect from Tesco on Thursday.

Sainsbury is opening stores outside its heartlands in the south of England, as well as expanding online and into convenience shopping and non-food ranges such as clothing.