Sainsbury's festive sales have not matched some UK rivals

But Britain's third biggest grocer said its performance over the key Christmas trading period had been "encouraging".

Like-for-like sales during the quarter grew by just 0.1%, as a major overhaul of the group's IT systems and distribution centres hit trading.

However, like-for-like sales rose 2% in the four weeks to 3 January, boosted by the company's core food ranges.

Overhaul hurting

Sainsbury's has invested billions of pounds in modernising its UK stores, computer systems and depots as part of a major revamp which its says should be completed by March.

Chief Executive Sir Peter Davis said: "The sheer volume of change is affecting our stores' performance."

Sainsbury's has also introduced a wider range of non-food products in a bid pull in more customers and stem its sliding market share.

But the company's recent performance is likely to fall some way short of its main UK rivals.

Better US sales

Analysts had hoped sales would rise following a 0.2% drop in the group's second quarter sales.

Last week, rival supermarket chain Morrisons posted record like-for-like sales over the Christmas period - up 10.2%.

Wal-Mart-owned Asda reported similar record trading, with 18 million transactions in the week before Christmas, while market leader Tesco is due to unveil its figures on Tuesday.