 Sainsbury's says it was encouraged by its Christmas sales |
Sainsbury's has said it is encouraged by figures showing that the decline in its food sales slowed over Christmas. Like-for-like sales excluding petrol in the 12 weeks to 1 January fell 1.2% on a year ago, following a 1.1% fall in the previous quarter.
But the fall slowed to 0.4% over the festive period when the supermarket said it had improved its product availability and customer service.
However, Sainsbury's warned that trading was still "challenging".
First step
Sainsbury's has seen its share of the market decline in recent times in the face of fierce competition from Tesco and Asda.
Chief executive Justin King said he was disappointed with the like-for-like fall. However, he said sales over the period had been in line with expectations.
"After a difficult November, there was an improving trend over the Christmas and New Year period," he said.
"This sales performance was in line with our plans and was a good first step in delivering our sales led recovery."
Like-for-like sales including petrol rose 2.4% over the quarter while total sales were up 6.1% on last year.
Store improvements
Mr King warned that trading in the first quarter of 2005 would be "challenging" but expressed confidence that customers would notice the improvements made to its stores.
 |  The numbers are fine but there are still some tough times ahead  |
"Our customers tell me we have made a big step forward," he said.
Sainsbury's has cut prices on 6,000 products over the past year in an effort to generate more business.
"Overall the numbers are fine," Tim Attenborough, a retail analyst with Exane, told Reuters.
"But there are still tough times ahead."
Sainsbury's has taken action to improve product availability after logistical problems meant its shelves were often not fully stocked.
The retailer's supply chain was badly disrupted by problems stemming from the introduction of new IT and delivery systems.
In order to meet Christmas demand, Sainsbury's opened a previously closed depot and hired an extra 3,000 shop staff.
Recovery plan
According to sales data released on Wednesday, Sainsbury's market share has recently stabilised after declining for much of 2004.
Mr King said that the retailer's three year recovery plan - which aims to raise its sales by �2.5bn by 2007/8 - was on track.
By the end of 2005, Sainsbury's sales should be growing in line with the market, Mr King stressed.
"We said this is a three year turnaround," he said.
"Being successful in this marketplace means you have to be a very good business because we have very good competitors."
Sainsbury's shares were up 0.9% at 267.25p by mid-afternoon.
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