Tesco Tesco warned its trading profits would be at the low end of expectations
The UK's biggest retailer, Tesco, says it is disappointed by its seasonal trading in the UK.
Like-for-like sales, which exclude the effects of new store openings, fell 2.3%, excluding fuel and VAT.
Tesco chief executive Philip Clarke said the international businesses had made good progress despite a challenging economic environment.
Total group sales for the seven weeks to 7 January rose 5.2% including petrol and 4.0% excluding petrol.
The supermarket warned that its profits for the year would be "around the low end of the current consensus range".
Tesco reported UK figures excluding VAT to strip out the effect of the increase in VAT at the start of 2011. When VAT was included, like-for-like sales fell 1.3%.
In its statement, the supermarket chain also suggested that its spending on its promotion campaign - The Big Price Drop - had not been successful.
"In a highly promotional market, the volume response to our increased investment into lowering prices did not offset the deflation it has driven," it said.
But Tesco reported online sales growth in the UK of 14%, across food and non-food.
It said it was pleased with the performance of its international businesses, although it was seeing "early signs of more cautious behaviour".