The retailer also said that its General Merchandise and Clothing businesses "outperformed the market in challenging conditions".
The London-based supermarket operator said it expects full-year underlying profit to be moderately ahead of the consensus analyst estimate of £559 million.
Sainsbury's said total retail like-for-like sales, excluding fuel, rose 1.1 percent in the 15 weeks to January 6, its fiscal third quarter - ahead of analysts' average forecast of 0.9 percent and growth of 0.6 percent in the previous quarter.
The firm, which bought electricals and toys retailer Argos in 2016, said on Wednesday total retail like-for-like sales, excluding fuel, rose percent 1.1 in the 15 weeks to January 6, its fiscal third quarter.
Laith Khalaf, senior analyst Hargreaves Lansdown, said: "Sainsbury's put in a solid performance in the last quarter of the year, despite its exposure to the fast-shrinking general merchandise market".
Total grocery sales grew 2.3 percent with groceries online and convenience store sales up 8.2 percent and 7.3 percent respectively.
"We had a strong Christmas week, with record sales, over 340,000 online grocery orders and stellar growth in Argos Fast Track delivery and collection".
He said that online sales had accounted for 20 per cent of all sales during the quarter. "Friday 22nd December was our biggest sales day for stores and we also delivered an online grocery order to customers every second".
The second largest United Kingdom grocer reported an increase in like-for-like sales of 1.1 percent during its third quarter, which includes the Christmas period.
Argos had a strong Black Friday sale before Christmas, Sainsbury said.
"We have to acknowledge the fact that the (non-food) market is challenging and there's certainly a little bit of a squeeze on consumer disposable income and where people are able to defer purchases they do", Chief Executive Mike Coupe told reporters.
Mr Coupe is overseeing the rapid expansion of Argos stores within Sainsbury's supermarkets, and the group now has 164.