Sainsbury's sales top forecasts

Grocer J Sainsbury beat Christmas sales forecasts as store extensions and its expansion into convenience outlets, online shopping and non-food ranges helped it weather a tough market.

Britain's third-biggest supermarket group behind Wal-Mart's Asda and industry leader Tesco said on Wednesday sales at stores open over a year rose 2.1 per cent excluding fuel in the 14 weeks ended January 7.

Stripping out VAT sales tax, the increase is likely to be around 1.2 per cent, which compares with a forecast rise of 0.9 percent in a poll of analysts.

Britain's retailers are mostly struggling as disposable incomes are squeezed by rising prices, muted wages growth and government austerity measures, and as shoppers worry about a weak housing market, rising unemployment and the euro zone crisis.

Analysts believe Sainsbury's had the strongest December of Britain's top four grocers, based on market research data from Kantar Worldpanel published on Tuesday.

Sainsbury's said non-food sales grew faster than grocery sales, while sales at its convenience stores jumped almost 25 percent. Its website delivered sales growth of almost 20 percent.

It joined rivals in warning the first few months of 2012 would be difficult as shoppers pay off their Christmas bills, but was hopeful events such as the Olympic Games in London and the Queen's Diamond Jubilee would boost summer trade.