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Sainsbury's has revealed underlying profits growth in line with forecasts, despite a "tough economic environment".

The UK's third largest supermarket chain said were up 6.6% compared with a year earlier.

Like-for-like sales, which strip out the effect of changes in floorspace, were up 1.9%, excluding petrol sales.

Pre-tax profits were £395m, with underlying profits at £354m after one-off items were excluded.

"We expect the economic environment to remain challenging for the foreseeable future, but we are confidence of further good progress in the Christmas period ahead," said the firm in its statement.

'Running hard'

Sales were helped by new store openings - in particular its smaller convenience stores - as well as rising online sales.

Sainsbury's also launched initiatives to attract business from customers on tighter budgets, such as its "feed your family for £50" offer.

Last month the firm announced that it would match the prices of certain products at rivals Tesco and Asda, in a bid to attract new customers.

Sainsbury's is issuing customers with coupons to the value of the difference between its branded goods and those of its rivals.

"In the shadow of larger international rivals, Sainsbury continues to progress," said Keith Bowman, analyst at stockbrokers Hargreaves Lansdown.

"Management is running hard in order to improve efficiency and reduce costs, whilst it arguably lacks the distraction of overseas ventures such as Tesco.

"On the downside, the environment remains extremely competitive [and] the consumer backdrop remains fragile."