UK food manufacturer Northern Foods has reported a 2.9% fall in third-quarter sales caused by a slide in biscuit sales in the crucial Christmas trading period.

The group, which makes own brand ready meals, quiches and desserts for leading food retailers such as Marks & Spencer, Sainsbury and Tesco, also said sales for the three months to 31 December fell below its forecasts.

Northern Foods reported underlying sales growth for the third-quarter of 2.5%, compared to the 3.5% growth in the first half to September, reported Reuters.

The company said its third-quarter biscuit sales were down 6% compared to the third quarter of last year and warned that biscuit profit margins would likely remain under pressure in the first three months of 2003, and price increases would be necessary to cover the rise in chocolate prices.