Sainsbury's reports first Christmas sales drop in a decade

Sainsbury's reported its first sales fall over the key Christmas period in more than a decade and said it expected a challenging 2015.

The British supermarket giant's like-for-like sales fell by 1.7% in the 14 weeks to January 3, excluding fuel.

But it wasn't all bad: the sales figures were better that the city had expected, and Sainsbury's said it had clocked up a record 29.5 million customer transactions in the week prior to Christmas.

The Christmas sales figures were also an improvement on the previous quarter, when like-for-like sales excluding fuel fell 2.8%.

Mike Coupe, chief executive of Sainsbury's, said: "The outlook for the remainder of the financial year is set to remain challenging, with food price deflation likely to continue. Our performance in the third quarter showed an improving trend quarter-on-quarter.

"However, given the uncertainty in the trading environment, food price deflation and the price reductions we announced this week, we currently expect our fourth quarter like-for-like to be similar to that of our first half."

All the large supermarkets are expected to report a decline in Christmas sales as they absorb the impact of budget gainers Aldi and Lidl.

Sainsbury's shares increased by over 3% in early morning trading to reach £242.80.