J Sainsbury, the UK supermarket chain, today bucked the gloomy trend in the retail sector by reporting a 4.5 per cent rise in sales over the Christmas period in what it claims is its best-ever performance over the festive season.

The rise in like-for-like sales, which strips out gains from new stores opened during the 13 weeks to January 3, beats analysts' forecasts of a 3.9 per cent increase and is in stark contrast to Marks & Spencer, which yesterday revealed food sales down 5.2 per cent.

Sainsbury's performance tallies with Waitrose, which is part of the John Lewis Partnership, which reported a 41 per cent surge in sales in the week to December 27.

Justin King, chief executive at Sainsbury's, said: “Sainsbury’s good trading performance has continued over the past 13 weeks… with our best ever Christmas performance completing a good overall third quarter.”

However, Mr King cautioned that the economic environment remains particularly challenging and that the company expected this to continue in 2009.

The company experienced its busiest ever trading day on December 23 and also had its highest ever trading performances for both Christmas Eve and New Year’s Eve. Shares in Sainsbury's rose 2.25 per cent to 330p in early trading.

It said strong product availability and good promotional offers across both its cheaper and more expensive lines helped win over customers, with 22.6 million transactions in the seven days before Christmas. However, it did note that lower prices compared to a year ago had diluted overall sales growth.

Mr King said there was evidence of some trading down, with sales of the group’s cheaper “basics” range, which accounts for about 3 per cent of total sales, rising 40 per cent, while there was a slight decline in its more expensive “taste the difference” range, which accounts for about 7 per cent of total sales.

However, Mr King said that despite consumers being “incredibly challenged” the chain’s customers recognised there was no need to go elsewhere to get value, with customers instead opting to buy a cheaper Sainsbury’s offering.

The group also reported strong sales growth from its non-food ranges, boosted by a special toy promotion and growth from its two clothing lines. It is now the UK’s eighth largest clothing retailer by volume with a 2.3 per cent market share.

In contrast to other retailers and much of the wider economy Sainsbury’s will actually create several thousands jobs this year by opening new stores and keeping on about 10 per cent of its 20,000 Christmas temps.

Elsewhere in the retail sector this morning, Majestic Wine, the UK’s largest wine warehouse chain, said that like-for-like UK sales for the two weeks to January 5 had fallen 2.9 per cent as cost-conscious customers cut back on buying champagne for the festive season.

Steve Lewis, chief executive at Majestic Wine, said: “We saw modest growth in sales to our private customers over the Christmas period. Sales to businesses, especially of champagne, were down on last year as they continued to rein in their spending.”

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