The UK’s second-biggest supermarket beat forecasts with 0.1 per cent higher sales for the 15 weeks to January 7 in stores open for at least a year, sending its shares 2½p higher to 261½p.
This included a record Christmas week when takings across the group exceeded £1billion.
Analysts had expected like-for-like sales to fall by 0.8 per cent.
The volume of groceries sold was flat as Sainsbury’s removed most multi-buy promotions, while price deflation slowed to 0.5 per cent compared with a fall of one per cent over the previous six months.
Chief executive Mike Coupe, pictured, insisted the group has the right strategy to withstand a “competitive outlook and uncertainty over the impact of sterling”.
Like-for-like sales at Argos rose four per cent, with toys and wearable technology among popular buys. Clothing and general merchandise sales were up 10 per cent and three per cent respectively.
Online sales of groceries grew nine per cent, with takings at convenience stores six per cent higher.
Coupe said: “Our Argos digital stores in Sainsbury’s supermarkets are performing well, as awareness of the convenience of shopping at both under one roof grows among our customers.”
The retailer has 30 Argos digital stores in its supermarkets and expects to open a further 250 over the next three years.
Coupe said: “When Argos customers come into our shops, grocery sales go up. They like the idea of the convenience that these locations make to their lives.”
John Ibbotson, director of consultancy Retail Vision, said: “The integration of Argos has proved a distraction, but Argos’s solid performance in the toy price war with Tesco could yet prove decisive. Argos will be key to the longterm success of Sainsbury’s multi-channel strategy, so this is an encouraging start.”
Lidl added to the cheer as it grew December sales by 10 per cent on the previous year.
Turkey and seasonal vegetable sales jumped by 40 per cent and 60 per cent respectively.
The German-owned chain’s UK boss, Christian Härtnagel, said: “It’s incredibly encouraging that, during this highly competitive time, we have achieved our most successful festive trading period ever.”