* Q1 like-for-like sales ex fuel up 0.1 pct
* Total sales up 1.3 pct
* Says price-cutting strategy paying off
* Says winning customers from Morrison, Tesco, Sainsbury
(Recasts, adds detail, background, CEO comments)
By James Davey
LONDON, May 15 Supermarket chain Asda, the
British arm of the world's biggest retailer Wal-Mart,
said a strategy to cut prices had stemmed a loss of customers to
discounters and attracted them from its three big rivals.
In common with market leader Tesco, Sainsbury
and Morrison, Asda has been hit by the rapid
rise of the "hard" discounters Aldi and Lidl
in the UK.
Asda, based in Leeds, northern England and whose slogan is
"saving you money every day", said in November it had identified
structural change in the market and would spend 1 billion pounds
($1.7 billion) on lowering prices over the next five years.
"Our strategy is working, we are certainly performing ahead
of Morrisons, Tesco and Sainsbury's and the losses that we were
seeing to the discount market are very clearly mitigated," Asda
Chief Executive Andy Clarke told reporters on Thursday.
Asda, whose everyday low-price deals include a loaf of
Warburtons bread for 1 pound, said sales at stores open more
than a year, excluding fuel, rose 0.1 percent in the 15 weeks to
April 20, its fiscal first quarter, compared with the same
period last year, returning to growth after a 0.1 percent
decline in its previous Christmas quarter. Total sales rose 1.3
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.
Asked if a grocery price war was being waged, Clarke said:
"Not from my perspective ... We are in control of our agenda and
not knee-jerking and reacting to what others may decide to do."
Chief Financial Officer Alex Russo said Asda's price cuts in
the first quarter had narrowed the gap with discounters and
widened the gap versus its three big rivals.
Data from market researcher Kantar Worldpanel last week
showed UK grocery sales growing at their slowest rate for at
least 11 years over the past three months, reflecting price cuts
and easing food price inflation.
That data showed the 579-store Asda was the best performing
of Britain's big four grocers.
Last week Morrison, which issued a profit warning in March,
posted a 7.1 percent slump in first quarter like-for-like sales.
Asda set out its strategic priorities for the next five
years last November. The firm wants to improve its core business
and increase its reach and access though the development of its
online offer and the opening of more stores, particularly in
London and the southeast of England, where it is relatively
The grocer also said on Thursday it planned a new store
management structure that removes some department manager roles
and creates new deputy manager, trading manager and section
manager roles and additional section leader roles.
The proposals, which are subject to worker consultation,
involve around 4,100 managers but will create 5,000 roles, it
said. Asda declined to comment on projected cost savings from
Wal-Mart on Thursday reported a 5 percent drop in quarterly
profit as a severe winter in the United States kept shoppers
from its stores.
($1 = 0.5960 British Pounds)
(Additional reporting by Paul Sandle; Editing by Erica
Billingham and David Holmes)