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Sainsbury's toughs out Christmas sales scrap

Sainsbury's has posted its weakest sales growth for seven years to all but confirm that Christmas 2012 was one of the most challenging for the UK's big supermarkets in the last decade.

But Justin King, chief executive, mounted a strong defence of its performance, pointing out it represented the grocer's 32nd consecutive quarter of growth, boosted by record sales, particularly on the final Sunday before Christmas. In one hour on 23 December it managed sales of £16m, while it took in more than £100m on Christmas Eve.

Mr King, Sainsbury's boss since 2004, also denied he had any plans to step down from the UK's third-biggest supermarkets group.

Sainsbury's grew like-for-like sales, which strip out the boost from new space, by 0.9 per cent in the 14 weeks to 5 January, which was its slowest sales growth since 2005 but was in line with analyst expectations.

The City is tipping Tesco, the grocery market leader, to post UK trading ahead of Sainsbury's today. Both listed supermarkets enjoyed a much better Christmas than rival Morrisons, which saw its sales tumble by 2.5 per cent.

Under Mr King's leadership, Sainsbury's has been the most consistent of the big four grocers, including Asda, at delivering sales growth over recent years, but Morrisons and Tesco remain substantially more profitable.

On trading, Mr King pointed out that Sainsbury's had delivered 2.9 per cent like-for-like sales growth over the last two years, following a "knockout Christmas in 2011". He said: "We are the only major grocer delivering market share growth."

But Sainsbury's shares fell 9.8p, or 2.9 per cent, to 329.2p amid concerns over another tough year.

Sainsbury's has opened 68 convenience stores so far this financial year, which helped its smaller stores division to post a 17 per cent leap in sales in the third quarter.

Total sales at Sainsbury's rose by 3.3 per cent, excluding fuel, in the quarter.

Cash-strapped consumers bagged the grocer's own-label ranges in huge volumes with champagne and prosecco sales up 15 per cent.