Bumper Christmas boosts Sainsbury's growth

The figure, excluding VAT and fuel, was achieved after the chain served one million more customers each week over the quarter to January 2, hitting an all-time high of 24 million customers in the week to Christmas Eve.

Sainsbury's described trading conditions as challenging but said it was confident of good progress in 2010.

The like-for-like figure was stronger than City forecasts, although lower food price inflation caused growth to slow from the 5.4 per cent seen in October.

The performance comes amid stronger competition from Waitrose and Morrisons, while Tesco staged a promotional blitz over Christmas by offering 180m worth of vouchers under its double Clubcard points scheme.

Retailers also faced difficult weather conditions in the run-up to Christmas, although Sainsbury's said it maintained record levels of availability.

The retailer created up to 20,000 seasonal jobs in order to meet demand over the Christmas and New Year period.

It said today that it had subsequently offered permanent roles to more than 1,000 temporary staff.

Sainsbury's shares opened two per cent higher as analysts said today's performance kept the chain on course to achieve annual pre-tax profits of around 625m.

Sainsbury's is enjoying its fifth year of like-for-like sales growth, amid a turnaround in fortunes under chief executive Justin King.

He said today: "The business continues to perform well in what remains a challenging consumer environment."