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Supermarket Sainsbury's reports mixed trading

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(Globalpost/GlobalPost)

British supermarket chain Sainsbury's announced mixed quarterly sales on Wednesday as a tough autumn gave way to a record Christmas period, highlighting shoppers' tightening of budgets amid austerity.

Sainsbury's, Britain's second-biggest supermarket after Tesco, said that group sales climbed 0.2 percent in the 14 weeks to January 4, the group's third quarter, compared with the equivalent period a year earlier.

Sales slowed markedly compared with activity in Sainsbury's second quarter, when they came in at 2.0 percent.

"This (third) quarter has been characterised by a very tough sales environment throughout October and November, with customers saving up in order to treat their families over the Christmas period," chief executive Justin King said in a statement.

Sainsbury's said it had seen its "best Christmas ever", noting that in the seven days prior to the festive period, the supermarket experienced its busiest ever trading week, with more than 28 million transactions.

Shares in Sainsbury's were down 0.79 percent to 366 pence in early deals on London's benchmark FTSE 100 index, which was showing a loss of 0.27 percent at 6,737.12 points.

"Sainsbury's reported like-for-like sales for the third quarter trading period grew by 0.2 percent, beating market forecasts for a 0.5 percent decline in sales and keeping the pressure on Tesco, who reports their own numbers tomorrow," said Joshua Raymond, chief market strategist at City Index traders.

"This is Sainsbury's 36th consecutive quarter of sales growth, a remarkable achievement against a backdrop of increasingly challenging competition for lower end retailers such as Aldi and Lidl who continue to take market share from the biggest players.

"Sainsbury's is now the number two retailer in the UK, behind Tesco, with (Walmart-owned) Asda closely behind in number three spot," he added.

Britain's biggest retailer Tesco posts its Christmas sales on Thursday along with the country's largest clothes chain Marks & Spencer.

"With Sainsbury's reporting slightly better numbers than forecast and indeed another quarterly profit growth, Tesco really needs to deliver," said Raymond.

"The Christmas trading period is the biggest period for any retailer and a failure of Tesco to attract sales will continue to eat away at shareholder confidence and could raise question marks over the solidity of senior management positions."

While British economic growth is on the rise, state austerity continues to bite, forcing many Britons to tighten their belts.

Finance minister George Osborne on Monday warned that the country needs to find an extra £25 billion ($41 billion, 30 billion euros) of painful cuts after next year's general election.

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