Sainsbury's Christmas sales beat forecast

Strong sales of premium groceries and non-food ranges such as clothing helped J Sainsbury to report a rise in Christmas sales which analysts expect will be the best among the top four grocers.

Britain's third-biggest supermarket group, which trails market leader Tesco and Wal-Mart's Asda in terms of annual sales, said on Wednesday sales at stores open over a year rose 3.6 percent, excluding fuel but including VAT sales tax, in the 14 weeks to January 8, its fiscal third quarter.

That was up from a 2.9 percent increase in the second quarter and compared with an average forecast for a rise of 3.4 percent in a Reuters poll of 15 analysts.

"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 on Tuesday 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.

Like rival Nielsen, it said Sainsbury had the best Christmas of the top grocers.

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 percent.

That would be ahead of the 1 percent increase posted by industry No.4 Morrisons for the six weeks to January 2 and above the 0.9 percent 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.

Source : Mark Potter - Reuters