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J. Sainsbury Plc reported better-than-expected holiday results, but still continued to lose market share to discounters as the British retailer stated a 1.7% decline in sales.

Despite marking one of its worst holiday performances, Sainsbury still reported results above analysts expectations of 2.5% to 4.4% drop in same-store sales during the 14 weeks to 3 January.

Sainsbury is the first of the big four UK retail chains, lagging behind market leader Tesco and Wal-Marts Asda, to report its third-quarter results. London-based Sainsbury said its total retail sales during the reported period fell 0.4%, excluding fuel, or 2.5% down including it.

Sainsbury and other retailers have been rapidly losing customers to German discounters Aldi and Lidl, who are also projected to outperform during the holidays. Exposing its profits to risk the UK companies took counter measures and poured more funds into online and convenience-store offerings, while also reducing prices.

In November, Sainsbury said it will spend £150 million each year in price cutbacks of some of its most popular products. During next week the company will lower the price tag on over 700 products, including meat, fish and poultry.

Despite the discounters strong-growth trend during 2014, researcher Kantar Worldpanel projected moderating numbers for the German companies.

The groups Christmas performance was also boosted by the extra cash customer had due to decreased food and fuel prices, said CEO Mike Coupe. Other contributors were Sainsburys premium “Taste the Difference” food range, up 5% year-on-year, clothing business, which scored a 10% increase, and the convenience businesss growth of more than 16%.

“Sainsbury’s has provided a great Christmas for our customers,” said Mr. Coupe. “Our colleagues continue to provide excellent in-store service, and again did a fantastic job of serving our customers during the busiest time of the year.” He added that the company achieved a record-breaking week before Christmas, which saw over 29.5 million customer transactions.

Sainsbury also said that same-store sales during the next quarter are projected to mirror the 2.1% decrease reported in the first half of the business year, citing food price deflation.

J. Sainsbury Plc gained 0.47% on Tuesday and closed at GBX 234.60 in London. On Wednesday the stock dropped 2.37% to trade at GBX 229.05 at 15:17 GMT, marking a one-year decrease of 37.49%. The company is valued at £4.49 billion.

According to the Financial Times, the 17 analysts offering 12-month price targets for J. Sainsbury plc have a median target of GBX 250.00, with a high estimate of GBX 330.00 and a low estimate of GBX 155.00. The median estimate represents a 6.56% increase from the last close price.

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