30/09/2015 07:50 BST | Updated 30/09/2016 06:12 BST

Sainsbury's Lifts Profits Forecast As Drop In Sales Reduces

Sainsbury's delivered some welcome cheer from the under-pressure supermarket sector as it increased its profit outlook for the year after narrowing sales falls. 

The chain posted a 1.1% drop in like-for-like second-quarter sales, excluding fuel - its seventh quarter of falling sales in a row.

But the decline was better than the 2.1% fall seen in the previous three months and Sainsbury's said it saw the number of sales and transactions rise, while it added that lower average basket spend in supermarkets continued to stabilise.

The group now expects full-year profits to be "moderately" ahead of the £548 million expected in the City, although this is still a sharp fall from the £681 million reported the previous year.

The Big Four supermarkets have been squeezed amid a fierce price war as they fight back against the increasing popularity of discounters Aldi and Lidl.

But Sainsbury's said it was being buoyed by its turnaround programme of price cuts and promotions, with better-than-expected sales and cost savings in its second quarter.

Mike Coupe, chief executive of Sainsbury's, said: "Whilst the market is clearly still challenging, with food deflation impacting many categories, we are making good progress on delivering our strategy."