Sainsbury’s has waned that the outlook for the rest of the financial year is likely to “remain challenging” as it revealed its first sales fall in over a decade.  

The fall in sales overall comes despite double-digit growth in its convenience business, which saw its largest ever day for sales on 24th December, taking over £8 million. The company’s website also saw its biggest Christmas to date.

However, in the 14 weeks to January 3rd, total retail sales fell 0.4% excluding fuel, with a 1.7% fall in like-for-like sales (also excluding fuel).

The supermarket added that tough times were set to last for the foreseeable future, with food price deflation likely to continue. In November, the chain announced plans to invest £150 million in the prices of some of its most popular products. This week will see prices lowered on over 700 of these, including reductions in Meat, Fish and Poultry.

However, chief executive Mike Coupe said that his firm’s performance had been good considering the tough market, including over 29.5 million customer transactions in the seven days before Christmas. Its clothing and general merchandise businesses also traded strongly over the quarter, in particular the clothing business which was up nearly 10% year-on-year.

In a statement, Mr Coupe said: “Sainsbury's has provided a great Christmas for our customers. Food price deflation and falling fuel prices have enabled our customers to treat themselves over the festive period.

“The outlook for the remainder of the financial year is set to remain challenging, with food price deflation likely to continue. Our performance in the third quarter showed an improving trend quarter-on-quarter. However, given the uncertainty in the trading environment, food price deflation and the price reductions we announced this week, we currently expect our fourth quarter like-for-like to be similar to that of our first half. Our prices versus our supermarket peers have never been better and alongside our differentiated quality and service offer, we are confident we will help our customers Live Well for Less throughout 2015."