The supermarket reported that like-for-like sales (excluding fuel) rose by 1.1 per cent in the 15 weeks to 6 January compared to the equivalent period the year before.
"We delivered an excellent operational performance across the Group, with great availability, strong customer satisfaction scores and our lowest level of waste ever at Christmas", said Mike Coupe, Sainsbury's CEO.
The company said Argos saw record sales over Black Friday, on November 24, and the business continues to grow market share. The number of collections using its fast track service, which allows customers to get their items within four hours of purchasing them, rose by 39 percent and deliveries rose by 25 percent in the three-month period. 52 Argos stores were opened in Sainsbury's supermarkets, bringing the total to 164.
However, the retailer conceded it was cautious about the forecast thanks to the challenging market conditions.
Overall, grocery sales grew 2.3 per cent, while online grocery sales surged 8.2 per cent and convenience sales posted a 7.3 per cent gain.
Online sales - increasingly important for traditional bricks-and-mortar retailers - accounted for 20% of group sales during the quarter.
The weaker performance is Argos is in stark contrast to past year when the catalogue retailer turbo-charged the group's Christmas sales with revenue growth of 3.7%.
'We also helped our customers to live well for less this Christmas, offering key Christmas vegetable lines for 25p and some of the lowest turkey prices in the market, ' the retailer said.
On Tuesday Britain's fourth ranked supermarket chain Morrisons beat Christmas sales growth forecasts while industry data indicated market leader Tesco outperformed its listed rivals during the festive quarter.
Mr Coupe said the company was pleased with the performance, adding it saw a boost from both its premium lines and cut-price offers. "Friday 22nd December was our biggest sales day for stores and we also delivered an online grocery order to customers every second".
Sainsbury's now has a 16.2 per cent share of the overall United Kingdom grocery market, according to analytics firm Kantar Worldpanel, behind Tesco but ahead of Asda and Morrisons.
Mr Coupe said that customers bought more of the supermarket's higher-end "Taste the Difference" range this Christmas period than last, seemingly treating themselves despite generally feeling the squeeze of higher inflation.