J Sainsbury insisted yesterday that it was well placed to weather the worsening economic climate, despite revealing the lowest first-quarter sales growth of Britain’s four biggest super-market chains.

Justin King, its chief executive, said that the group was performing “bang in line” with expectations while managing to absorb the worst of the inflationary pressure sweeping the high street.

Mr King said that Sainsbury’s had experienced a marked rise in sales of own-label basics, such as rice and pasta, as customers shunned more expensive branded products.

However, Sainbury’s shares fell by 10½p, more than 3 per cent, to 325½p as analysts said there were signs that it had begun to lose out to more value-focused rivals, such as Asda and Morrisons.

A trading statement showed that like-for-like sales revenue across Sainsbury’s stores rose by 3.4 per cent, excluding fuel, in the 13 weeks to June 14, below City expectations and less than the growth rate at each of its main rivals.

Taking out the positives of inflation and higher prices, sales volumes were marginally down on a year ago during the first quarter of Sainsbury’s financial year. Morrisons reported like-for-like growth of 7 per cent over its first quarter, which ended on May 4.

Freddie George, retail analyst for Seymour Pierce, said: “Although [Sainsbury’s] figures were up against difficult comparatives, they are disappointing and show that consumers are moving to more value-orientated retailers.”

The shares are trading 46 per cent below the 600p tag put on the business by the Qatari Investment Authority when it was mulling a £10.6 billion takeover last year.

Mr King admitted that the economic climate was tough but he said that Sainsbury’s was confident of hitting full-year profit targets. He added that it expected to win customers who decide to save by shopping for food rather than eating out. Sales of both Gressingham Duck and champagne rose by 250 per cent.

Mr King said: “We are pleased with the first-quarter performance; it’s our fourteenth consecutive quarter of like-for-like growth. People are being clever in the way they are shopping, but food is very resilient, even in times of a downturn.”

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