Sales at U.K. supermarket J. Sainsbury fell in the last three months, the company said on Wednesday, after a tough Christmas for Britain's leading grocers.
Same-store sales, excluding fuel, for the 14 weeks to January 3 fell 1.7 percent, it said, and slipped 3.9 percent when fuel sales were included. The figures come after Sainsbury's cut around 1,000 prices over the period, in an effort to maintain its market share in the competitive supermarket space.
Shares of the retailer were trading up around 3 percent after markets opened Wednesday but pared gains in mid-morning trade, briefly turning negative at one point.
John Rogers, chief financial officer of Sainsbury's, told CNBC that price was very important for customers, and that the supermarket had worked closely with suppliers to ensure it was competitive on price.
Lower dividend
He conceded that the retailer's earnings would be affected by the fall in sales, however.
"Our earnings expectations for this year are less than last year - that means we anticipate paying out a lower dividend this year than last year," Rogers told CNBC Europe's "Squawk Box", although he did not specify what the dividend could be.
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There would be further failures in the broader supermarket retail sector, he added, but stressed that Sainsbury's was resilient.
"We do not foresee today the need to raise equity for our business, you can never say never, but we don't foresee that need," he told
In the group's trading statement, CEO Mike Coupe said the outlook for the remainder of the financial year was "set to remain challenging, with food price deflation likely to continue."
The figures come at a tough time for U.K. supermarkets, amid growing competition from German discounters Aldi and Lidl.
Rogers acknowledged the growth of discounters that had eaten away at the supermarket's market share, which he said: "reflected challenging economic times." But he added that Sainsbury's continued "to outperform in what is a very tough sector."
With regards to pricing, Rogers said that Sainsbury's competed "toe to toe with competitors on price, but customers also care about quality, service and being able to get to their supermarkets easily."
'No horror show'
While Sainsbury's sales figures were "by no means a horror show," according to Bryan Roberts, director of Retail Insights at Kantar Retail, this year would be a challenging one for the retailer.
"Lacking Tesco's buying power and Asda's efficiency, Sainsbury's margins are set to be under further pressure. This might prompt some focus on costs, but we can only hope that any action in this regard focuses on back-end efficiencies rather than instore," he said in a note.
Sainsbury's is the first of the major grocers to publish Christmas figures, with Marks & Spencer (M&S) and Tesco due to report sales on Thursday.
Tesco's figures will be particularly closely watched. The U.K.'s biggest supermarket is battling a high-profile accounting scandal and issued a number of profit warnings in 2014; as such, it is expected to announce early plans for a strategic revamp along with its Christmas trading figures.
Tesco's like-for-like sales, excluding petrol, are expected to be around 3.5 percent lower over the Christmas period than in the previous year, according to Pradeep Pratti, analyst at Citi.
- CNBC's Catherine Boyle contributed to this report.