Sainsbury's said it remained cautious about the consumer environment but that, thanks to better than expected savings following its 2016 takeover of Argos, full year profits should be "moderately" ahead of market expectations.
Sainsbury's said total retail like-for-like sales, excluding fuel, rose 1.1 percent in the 15 weeks to January 6, its fiscal third quarter - ahead of analysts' average forecast of 0.9 percent and growth of 0.6 percent in the previous quarter.
The retailer said that it had enjoyed a merry season for food sales as it had provided more "flexible" ways for people to shop, with sales at its online and convenience arm rising 8.2 per cent and 7.3 per cent respectively in the 15 weeks to January 6.
Within Christmas week particularly, Sainsbury's said that it posted "record sales", including more than 340,000 online grocery orders, as well as "stellar growth" in its Argos Fast Track delivery and collection service. Sainsbury's said it won market share in general merchandise and clothing despite "challenging conditions".
Third quarter like-for-like (LFL) sales excluding fuel rose 1.1%, an improvement on the 0.6% seen in Q2.
"We're pleased with our performance across the group this quarter". Friday 22 December was the retailer's busiest day for sales and on that day Sainsbury's delivered an online grocery order to a customer every second.
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He said: "Customers bought more Taste the Difference food than previous year as people treated themselves and our popular 25p veg lines helped our customers live well for less".
Sainsbury's said that it had launched 185 new food lines for Christmas, had offered key Christmas vegetable lines for 25p and some of the lowest turkey prices in the market.
In addition, it undertook 34 range reviews during the quarter, covering around 13% of its grocery sales.
Catherine Shuttleworth, chief executive at retail marketing agency Savvy, added: "A solid performance from Sainsbury's this morning - the stores looked good this Christmas and 20% of business was online over the festive period - showing just how important flex in the operating model for supermarkets now is".
Sainsbury says Argos is growing market share.