Sainsbury's Christmas sales better than expected

Sainsbury's set the bar for supermarket trading over Christmas today as it posted better-than-expected sales growth in the third quarter.

The group, which has overtaken Asda to become the second-biggest supermarket in the UK, according to reports, delivered 3.6% like-for-like sales growth in the 14 weeks to January 8 after overcoming last month's severe weather.

The week running up to Christmas saw transactions hit an all-time high of 24.5 million.

The strong performance, which overshadows rival Morrison's modest 1% same-store growth revealed earlier this week, comes at the end of a quarter when the supermarket added a record-breaking 700,000 sq ft of store space and created 6,000 jobs.

The figure, which excludes fuel and includes VAT, will put pressure on industry leader Tesco, which will give its Christmas trading update tomorrow, and follows a mixed run for UK retailers - after high street chains HMV, Next and Debenhams all posted a slump in sales over the Christmas period.

Today's figures follow a more resurgent period for the group, which has seen sales growth accelerate throughout 2010.

It is benefiting from an offering which allows consumers to cut down on costs and trade up for luxury items, while aggressive moves to increase space and up the ante on non-food sales have also helped.

Industry figures from researcher Kantar Worldpanel, which are not publicly disclosed but were seen by The Times, show Sainsbury's became the second-largest supermarket group after its market share rose to 16.6% from 16.3% in the four weeks to December 26 while Asda's share dipped from 16.6% to 16.5%.

Sainsbury's chief executive, Justin King, hailed the supermarket's "best ever Christmas".

He said: "This record Christmas was delivered despite challenging weather conditions and our colleagues worked extremely hard to deliver great service to our customers, serving over 24.5 million customers in the seven days up to and including Christmas Eve."

The supermarket's high-end Taste The Difference range, which was relaunched to the tune of £1 billion late last year, proved popular over Christmas, including a 30% increase in sales of the Norfolk Black Woodland free-range turkeys.

The focus on non-food sales, which includes clothing, DVDs and electrical items, is still paying off - with the sector growing at three times the rate of food.

The supermarket claims to be one of the UK's fastest growing entertainment retailers - selling one in every three copies of Shrek 4 bought in shops, as an example.

The third quarter saw the chain open 11 new supermarket and 13 new convenience stores, as well as completing 14 extensions and 16 store refurbishments.

Looking ahead, Mr King added: "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.

"Our universal customer appeal together with our accelerated growth plans means we are well placed to make continued good progress in 2011."