London, Oct 8 - J. Sainsbury, Britain's No.3 supermarket group, posted second-quarter underlying sales towards the top end of analysts' forecasts, but said the economic environment was set to remain "extremely challenging".
The firm, which runs over 800 supermarkets and convenience stores, said on Wednesday that like-for-like sales excluding fuel, a key industry measure, rose 4.3 percent in the 16 weeks to Oct. 4, driven by strong demand for own-brand ranges and promotions as cash-strapped shoppers try to save money.
Forecasts ranged from 2.75 percent to 4.7 percent, with an average of 3.9 percent, in a Reuters poll of 9 analysts.
"The economic environment remains particularly challenging and we expect this to continue throughout the second half, but we have developed the Sainsbury's offer to perform in these conditions," Chief Executive Justin King said in a statement.
Data from researchers TNS WorldPanel suggests Sainsbury has lost a little market share in recent months to rivals more associated with cheaper prices, such as Wal-Mart's Asda, Morrison and discounters Aldi and Lidl.
Last week market leader Tesco posted a 4 percent rise in like-for-like sales excluding fuel for its latest trading period, while Morrison reported an 8.2 percent increase last month. But differences in the timing and length of the trading periods mean that none of the figures is directly comparable.
Sainsbury is 27-percent-owned by the Qatar Investment Authority (QIA) and is a perennial source of bid speculation. The QIA dropped plans for a 600-pence-share bid last November.
Sainsbury shares have beaten the DJ Stoxx European retail index by 5 percent this year. They closed at 314.75 pence on Tuesday, valuing the firm at 5.5 billion pounds.