Sainsbury delivers a surprise sales leap

Following days of intense speculation that the supermarkets chain had seen its market share eroded, King delivered a swift riposte to doom-mongers and enhanced his reputation as one of the savviest retail bosses.

Like-for-like sales at the third-biggest player after Tesco and Asda grew 3.7% in the 12 weeks to the end of December, a result that beat City expectations and increases the discomfort of Marks & Spencer in particular.

Yesterday M&S reported a 2.2% drop in sales over the same period, which sparked talk of a crisis and lopped £1.5 billion from the group's stock market value. M&S chief Sir Stuart Rose blamed the worst economic climate for a decade, a claim Sainsbury's numbers call into question.

In what could be seen as a swipe at Rose, King said: "I think it is dangerous to talk things down - it becomes a self-fulfilling prophecy." Asked if he wanted an interest rate cut, he replied: "I don't think it is for individual companies to say." Both M&S and Tesco have publicly pleaded for cuts.

King also had a kick at the official inflation statistics, which he argues are exaggerated. "The statistics are not sophisticated enough, they don't pick up the extent of promotional activity. The headline rate is not the true picture experienced by consumers," he said.

Sainsbury's total sales in the third quarter rose 5.9%, giving it the 12th consecutive quarter of growth. It seems on target to make profit for the year of £220 million. The shares which have been hammered along with the rest of the sector, today jumped 20p to 385p.

Ahead of the results, critics claimed King had taken his eye off the ball after a year that has seen Sainsbury the target of two serious takeover bids.

Today he crowed: "Speculation was whirling around ahead of the statement. We just had to wait until today to say we had a very good Christmas."

More than 21 million people shopped at Sainsbury's in the seven days before Christmas. On the busiest day, Saturday 23 December, it served 300,000 customers an hour.

Analysts at Numis Securities believe Sainsbury is well placed to cope with any downturn. They said: "The company does point out that consumer budgets are clearly under pressure and expects the market to continue to be very competitive. In our view though, food retail is one of the most defensive places to be in within the retail sector."

King played down claims that celebrity chef Jamie Oliver is at war with the chain over its use of factory farmed chickens. Oliver has written to all 150,000 staff, saying his views were misrepresented in the media and that he regards Sainsbury's as leader in the field of ethical food.