UK's Asda sales edge up in second quarter

Thursday 14 August 2014 15.40
Asda said sales at stores open over a year, excluding fuel and VAT, rose 0.5% in the 10 weeks to end of June
Asda said sales at stores open over a year, excluding fuel and VAT, rose 0.5% in the 10 weeks to end of June

Supermarket Asda, the British arm of the world's biggest retailer Wal-Mart, today posted a 0.5% rise in second-quarter underlying sales in a tough grocery market seeing its slowest growth in a decade.

Asda trails market leader Tesco, by annual sales, and is vying with Sainsbury's to be Britain's second biggest grocer.

It said today that sales at stores open over a year, excluding fuel and VAT sales tax, rose 0.5% in the 10 weeks to the end of June, compared to the same time last year. 

The outcome is an improvement on its first quarter performance when like-for-like sales rose 0.1%. 

The UK's major grocers, a group that also includes Morrisons, are under pressure from discounters Aldi and Lidl at the bottom end of the market and Waitrose and Marks & Spencer at the top end. 

But Asda, based in Leeds, has performed better than Tesco and Morrisons, both of which have issued profit warnings, with the former also parting company with its chief executive. 

The overall UK grocery market grew 0.9% in the 12 weeks to July 20, the lowest figure for 10 years, according to data published by Kantar Worldpanel last month. 

British consumers are shopping around for the best prices, buying little and often and wasting less and are increasingly opting for convenience stores or online shopping. 

Asda was the first of the big four retailers to attempt to counter the threat of the discounters by cutting its own prices. It said in November it would spend £1 billion on lowering prices over the next five years. 

Pledges to cut prices have also come from Tesco and Morrisons, while Sainsbury has vowed to remain competitive, raising analysts' concerns about a possible price war hitting margins and earnings across the industry.