SAINSBURY’S, which has a number of stores in Swindon, has reported a 0.4 per cent fall in like-for-like sales, excluding fuel, in the three months to January 9 compared with a year earlier.

Sainsbury’s chief executive Mike Coupe said the supermarket had traded well in a highly competitive market.

It comes as Morrisons surprised analysts by reporting its first positive sales in more than a year.

Sainsbury’s also published a strategic plan outlining the case for its proposed takeover of Home Retail Group.

The supermarket group had its first bid for the owner of Argos and Homebase rejected.

It has until February 2 to make an improved offer for Home Retail Group under Takeover Panel rules.

Reports suggest that Sainsbury’s has offered £1.1bn for Home Retail Group, but that shareholders are holding out for an improved offer of £1.6bn, or 200p a share.

On Wednesday, Sainsbury’s chief financial officer John Rogers said the takeover was a very strategically compelling opportunity and – if done at the right price financially compelling – but it was not a must-do deal.

“We’ll look at this in a very financially disciplined way and we won’t overpay for this transaction,” he said.

Home Retail Groups’s shares rose 4.2 per cent to 147.90p following Mr Rogers comments.

‘Challenging’ times Meanwhile, Mr Coupe said the 0.4% decline in Sainsbury’s third quarter sales was an improvement on the previous two quarters and he expects the second half of the financial year to be better than the first half.

He added sales in the seven days to Christmas were 2.6% higher at 30 million.

But he warned that “food deflation and pressures on pricing will ensure that the market remains challenging for the foreseeable future”.

Sainsburys supermarketImage copyrightGetty Images Christmas retail: Winners and losers Himanshu Pal an analyst at Kantar Worldpanel said Sainsbury’s had done “quite well” over the Christmas period, given the 2.6% rise in transactions and a rise in market share.

“Sainsbury’s is making the right moves in simplifying its pricing and strategy and reducing multi-buy offers,” he added.

Mr Pal added there is “a slight fightback from the big four supermarkets in terms of pricing and investment”.

But he said he expected the discounters, such as Aldi and Lidl, to continue to capture market share from them.

Mr Coupe said Sainsbury’s would “continue to remain competitive on price and our performance this quarter provides further evidence that our strategy is working”.

Shares in Sainsbury’s fell nearly 1% to 248.9p in early trading. On Tuesday shares had risen 3.3% after Morrisons’ strong results.

Rising market share According to market share figures from research firm Kantar Worldpanel, Sainsbury’s was the best performing of the big four supermarkets - which includes Tesco, Sainsbury’s Asda and Morrisons - in the 12 weeks to 3 January.

Its market share rose 0.1 percentage points to 17% compared with the same period in 2014, making it the only one of the big four to increase its share.

In November, Sainsbury’s reported a fall in half-year profits, citing a “particularly challenging” market as it said like-for like sales in the six months to the end of September fell 1.6% Underlying pre-tax profits for the period fell 17.9% to £308m.

According to stock broker, Bernstein, Sainsbury’s was also the only listed supermarket to open new stores in the period, with 16 new convenience stores.