Tesco says it saw "solid" UK sales over the Christmas trading period, with trade in non-food items such as clothing performing well.
Tesco said it was pleased with its Christmas sales performance
The supermarket saw UK like-for-like sales excluding petrol, which strip out the effect of new stores, rise 3.1% in the six weeks to 5 January.
While better than some other retailers over the Christmas period, the sales figures missed analysts' expectations.
Total international sales rose 26.9%, with strong growth in Europe and Asia.
Tesco said its online businesses had a "very successful" Christmas, with total sales up 24%, helped by strong demand for MP3 players, digital cameras and laptops.
Analysts had been expecting Tesco to report a 4% rise in like-for-like UK sales, and the slightly weaker-than-expected outcome pushed the retailer's shares down 3.1% to 407p by the close of Tuesday trade.
Last week, rival Sainsbury's reported a 3.7% rise in like-for-like sales, excluding fuel, for the 12 weeks to 29 December.
Some other UK retailers have reported poor festive trading, raising fears of an economic downturn as consumers rein in their spending.
However, Tesco finance director Andrew Higginson said the firm was very pleased with how Christmas trading had gone.
"It was a great Christmas for customers, we did a terrific job in the stores in terms of availability, and you know, it was a profitable Christmas for us," Mr Higginson told the BBC.
"Overall we're thrilled to bits, particularly given how some of the other retailers' results have come out."
Tesco said overall group sales rose 12.8% in the six-week period, with international sales increasing by 26.9%.
In central Europe, sales grew by nearly 30%. Tesco said it enjoyed "exceptionally good progress" in some of its newer markets, with sales in Turkey up by more than 80% and in Malaysia up by more than 60%.
Its newly-launched Fresh & Easy stores in the United States had received a "very encouraging" response from customers, Tesco said.
The retailer now has 28 stores operating in Southern California, Las Vegas and Phoenix.