Sainsbury's sales slip but full-year profits to beat expectations

The grocer said people have been buying more as it lowered prices amid the fierce industry price war

Sainsbury's has upgraded its profit forecast (Reuters)

Sainsbury's has predicted that its full year profits will come in ahead of expectations, sounding an upbeat note in the beleagured supermarket sector.

The grocer said people have been buying more as it lowered prices amid the fierce industry price war.

Chief executive Mike Coupe said: “Both volume and transactions grew as the decline in average basket spend in supermarkets continued to stabilise.

”Whilst the market is clearly still challenging, with food deflation impacting many categories, we are making good progress on delivering our strategy.“

Like-for-like sales excluding fuel slipped 1.1 per cent in the second quarter, a better-than-hoped decline.

Including fuel, sales slipped 3.3 per cent.

Clothing was particularly successful in the quarter, notching up 30 per cent sales growth with the help of a Back to School campaign.

Sainsbury's said cost savings were also ahead of expectations.

Like Britain's other major supermarkets - Tesco, Morrisons and Asda - Sainsbury's has been battling the rise of discounters such as Aldi and Lidl.

Aldi revealed on Monday it is stepping up the challenge to the established UK grocers by launching online.