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Asda reports LFL increase in last quarter

Asda is winning the opening skirmishes in the supermarket price war after reporting an increase in like-for-like sales for the last quarter.

Despite grocery sales growing at the slowest pace for a decade and rivals reporting a sharp dip in sales, Asda said the like-for-like sales grew by 0.5pc in the 10 weeks to the end of June.

Asda was the first of the "big four" to commit to lowering prices significantly late in 2013, when it pledged to invest £1bn into cutting prices over the next five years in order to compete with the rising popularity of the discounters Aldi and Lidl.

The company, which is owned by the world's biggest retailer Walmart, now appears to be reaping the benefits of that move.

Asda's performance is in marked contrast to Tesco,Morrisons, and Sainsbury's which reported falls in like-for-like sales of 3.7pc, 7.1pc, and 1.1pc respectively in their most recent trading updates.

Andy Clarke, chief executive, said: “The last quarter has seen unprecedented change within the food retail sector, and whilst I do not underestimate the challenge currently presenting retailers, I am proud that our business identified and put plans in place to respond to these changes early.

"We have a clear five year strategy based on everyday low prices and we continue to implement that strategy with agility and pace."

Britain's leading supermarkets are facing unprecedented pressures as shoppers cut back on spending and switch from out-of-town stores to smaller convenience stores and the discounters Aldi and Lidl.

However, despite the rise in sales for Asda, Walmart warned that sales in the US were flat and lowered its profits forecast for the year.

Doug McMillon, Walmart chief executive, said: "We wanted to see stronger comps in Walmart US and Sam's Club, but both reported flat comp sales."

Source : Graham Ruddick - The Telegraph

14 August 2014

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