Healthy sales figures from supermarket J Sainsbury yesterday were overshadowed by the sale of a 10% stake in the company by property tycoon Robert Tchenguiz.

Sainsbury said, after the market closed, that Tchenguiz had sold 88 million shares and that a discretionary trust of the tycoon no longer held any economic interest in a further 84.9 million shares. This total of nearly 173 million shares represents about 10% of the supermarket group.

Shares in Britain's third-largest supermarket had fallen as much as 17.9% to a four-year low of 258.5p yesterday as rumours circulated that a placing of 168 million Sainsbury's shares at 250p each by investment bank Kaupthing indicated the entrepreneur had exited his holding.

Shares in the company, still 27% owned by the Qatari government's investment arm which attempted a takeover last year, later recovered slightly to close down 47p, or 13.6%, at 267.75p.

Tchenguiz also ditched much of his stake in pubs group Mitchells & Butler, owner of the Harvester and All Bar One chains. But hopes that it had been sold to institutional investors, reducing the pressure on the board from dealing with a single large shareholder, were dashed after it emerged Bahamas-based billionaire Joe Lewis, co-owner of sports and media group Enic, had picked up nearly 88 million shares, giving him a 21.77% holding. Tchenguiz's Violet Capital retains a 3.34% interest.

Sainsbury yesterday posted like-for-like growth of 4.3% in the second quarter of its financial year ahead of consensus expectations of 4%.

Although over a slightly different period, it also outstripped the 4% second- quarter rise recorded by market leader Tesco, a success attributed by analysts to Sainsbury's comparatively small presence in the non-food space which has been most affected by the consumer downturn.

Market number two Asda yesterday said its September sales growth was "strong".

Industry figures indicate that Sainsbury's, which is seen as a top-end retailer, is losing market share to cheaper rivals but the company maintained yesterday it is hanging on to its customers although they are switching to cheaper own-brand ranges, encouraged by the company's "Switch and Save" campaign.

Chief executive Justin King said: "Customers are looking for value but finding it within our stores without having to go elsewhere."

Sainsbury's has boosted its cheapest "basics" range to 550 products and offers them in more stores. But the trend worried some analysts who are concerned about the impact on profitability, Panmure Gordon's Philip Drogan said: "Going forward, we would expect margin pressure to unfold With inflation peaking we expect like-for-like sales growth to become increasingly expensive."

Alistair Johnston, analyst at JP Morgan added: "Looking forward we are unsure whether this trading momentum will be sustained. In particular, we think that Sainsbury has been more promotional across the (first half) than its competitors and will suffer as Morrison, Asda and Tesco step up price and promotion activity into Christmas."

But King suggested that the company could benefit from "trading up" to its top ranges in the run-up to Christmas. "Quality food will be a big part of Christmas," he said, adding that the company had already seen strong early sales of items such as biscuits and gifts.

While Tesco chief Sir Terry Leahy last week said inflation had peaked, Darren Shapland, chief financial officer at Sainsbury, was more cautious.

"Inflation has been on the rise through the quarter. It looks like it is coming to its top and plateuing out. It is difficult to read what is going to happen over the next couple of quarters."

Figures from the British Retail Consortium published yesterday showed that prices rose at a reduced annual rate of 3.6% in September with food inflation easing back to 9.1% from 10% the month before.

King said yesterday Sainsbury is "well positioned as we approach the important Christmas trading period".

But Richard Hyman of consultants Deloitte warned of an "extremely difficult"

festive period, adding that retail sales could fall.

"In a historical context, it's the worst I have seen," he said cautioning that conditions were worse than the 1973-74 or 1990s recessions.