Chief executive Jo Stewart blamed strong competitor promotional activity and "weaker sales trends"for a 6% drop in biscuit sales in the three months to December 31.
"A promotional scheme that is commercially sensible [does not destroy margins] doesn't get the results," said Stewart. "You have to have better and better offers to get results."
Higher raw material prices would probably calm things down soon, when manufacturers will seek to pass costs onto customers, he added.
Underlying retail sales were down to 2.5% in the quarter compared to 3.5% in the first half. Total sales were down 2.9% reflecting the disposal of Ski and Munch Bunch to Nestlé.