Sainsbury’s has revealed like-for-like sales (LFLs) fell during the important festive period – and warned the remainder of its financial year would be “challenging”.

In a third-quarter trading statement for the 14 weeks to 3 January 2015 Sainsbury’s said its LFLS, excluding fuel, were down 1.7% in the period.

Total retail sales in the same period were down by 0.4% and the decline comes after the retailer announced a raft of price cuts.

Mike Coupe, Sainsbury’s chief executive, said: “Sainsbury’s has provided a great Christmas for our customers. Food price deflation and falling fuel prices have enabled our customers to treat themselves over the festive period.”

But he warned: “The outlook for the remainder of the financial year is set to remain challenging, with food price deflation likely to continue. Our performance in the third quarter showed an improving trend quarter-on-quarter.

“However, given the uncertainty in the trading environment, food price deflation and the price reductions we announced this week, we currently expect our fourth quarter like-for-like to be similar to that of our first half. Our prices versus our supermarket peers have never been better and, alongside our differentiated quality and service offer, we are confident we will help our customers Live Well for Less throughout 2015.”