J Sainsbury reported higher sales over Christmas as it drew shoppers with discounts to fight the effects of the economic slowdown, and said it will create up to 4,000 jobs this year.
The supermarket chain, the first of the four large players to report Christmas trading figures, said like-for-like sales rose 4.5pc, excluding petrol, in the 13 weeks to Jan 3. That compares with a 4.3pc rise in the second quarter and a restated 3.9pc rise during the same period last year. Total sales in the quarter rose 4.8pc.
Sainsbury had its "best ever Christmas", said chief executive Justin King, but he warned "the economic environment remains particularly challenging and we expect this to continue in 2009."
Nevertheless, the company will create between 3,000 and 4,000 jobs this year as it continues to expand its convenience store business, in contrast with rivals including Marks & Spencer which are cutting thousands of jobs as the recession deepens. Sainsbury employs more than 150,000 people in the UK.
The retailer has attracted customers from more expensive food stores such as Marks & Spencer and Waitrose, according to Mr King, as well as stopping its customers defecting to discount chains like Aldi by seling more goods on promotion and pushing its cheaper own-brand products.
Sales of half-price toys and the own-brand "basics" food range did particularly well over Christmas, Sainsbury's said, with sales up 40pc. The company also had its busiest-ever trading day on Dec 23, with 22.6m transactions in the week before Christmas.
Sainsbury said non-food sales, which includes clothes, homewares and electrical goods, continued to rise in contrast with market leader Tesco, which reported a drop in non-food sales in the three months to the end of November. However Sainsbury's non-food business is much smaller than Tesco's, so it rose from a lower base.
Sainsbury's strong festive trading contrasts with that of Marks & Spencer, which reported its poorest Christmas trading figures in a decade yesteday.
Like-for-like sales at M&S fell by 7.1pc over the 13 weeks to December 27, with clothing and general merchandise sales down 8.9pc and food sales down 5.2pc. The chain also said it will close 27 stores and cut its workforce by over 1,200 and launched what analysts labelled its "biggest ever" cost-cutting programme, with plans to cut its cost base by up to £200m.
Unlike M&S, Sainsbury did not sacrifice gross margins by offering discounts, finance director Darren Shapland said, because the growth in sales made up the difference. The company expects to meet market forecasts for pretax profit of about £525m.
The shares dropped 2.2pc to 315.75p in early trading.
Sainsbury's share price has recovered in recent months, since the retailer reported stronger sales growth than market leader Tesco.
Investors had avoided the shares on concern Sainsbury, which does not call itself a budget retailer like Tesco, Asda or the German chains Aldi and Lidl, would lose out as consumers pared back spending on all but the essentials.
Uncertainty over property entrepreneur Robert Tchenguiz's plans for his stake in the supermarket chain also weighed on the stock price last year.
Sainsbury has record Christmas, plans 4,000 jobs - Telegraph
Sainsbury has record Christmas, plans 4,000 jobs
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