Sainsbury's, Britain's second biggest supermarket group, reported a small fall in underlying sales in the key Christmas quarter, hurt by a weak performance from general merchandise. 

The group is trying to rebuild investor confidence in its strategy following a botched attempt to take over rival Asda.

It said today that like-for-like sales, excluding fuel, fell 0.7% in the 15 weeks to January 4, its fiscal third quarter. That compares with a second quarter fall of 0.2%. 

Sainsbury's said grocery sales grew 0.4% but general merchandise sales were down 3.9%.

It also cautioned that retail markets remained highly competitive and promotional and the consumer outlook continued to be uncertain.