* Q2 like-for-like sales up 0.5 pct
* Says profit up in line with sales growth
(Recasts, adds detail, CEO comments)
By James Davey
LONDON, Aug 14 Asda, the British arm of the
world's biggest retailer Wal-Mart, reported an
acceleration in quarterly sales growth and hailed the
improvement as proof that its price-cutting strategy is working.
Asda was the first of Britain's so called big four grocers,
which also include market leader Tesco, Sainsbury's
and Morrisons, to counter the threat posed by
discounters Aldi and Lidl by cutting its
The company said in November that it would spend 1 billion
pounds ($1.67 billion) on lowering prices over the next five
Sales at Asda stores open for more than a year, excluding
fuel, rose 0.5 percent in the 10 weeks to June 30, the grocer's
financial second quarter, versus the same period last year - an
improvement on first-quarter like-for-like sales growth of 0.1
Asda's market share improved by 14 basis points, while it
increased profit in line with sales growth. Its online sales
rose by more than 20 percent.
"What's clear from our performance from a market share
perspective and our comp (like-for-like sales) position is that
we are differentiating ourselves now from the other big three
retailers," Chief Executive Andy Clarke told reporters.
Tesco, Morrisons and Sainsbury's have all posted sales dips
in their most recent updates. Tesco and Morrisons have also
issued profit warnings, with the former also parting company
with its chief executive.
Clarke noted levels of disposable income were very different
in London to regions such as the north east of England and
"If you're a family on a budget in those difficult regions
it still feels very challenging. There is undoubtedly a
two-stage (economic) recovery," he said.
"We're very mindful of that, which is why our strategy
around value is working."
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.
The overall UK grocery market grew by 0.9 percent 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, increasingly opting
for convenience stores or online shopping.
The Bank of England gave a generally upbeat quarterly
economic update on Wednesday, with upgrades to the growth
outlook for this year and next, lower unemployment and inflation
remaining just below its 2 percent target.
However, data showed that average wages in Britain fell for
the first time in five years during the three months to June.
Separately on Thursday, Wal-Mart cut its full-year profit
forecast, citing higher employee healthcare costs and increased
investment in its online business.
($1 = 0.5993 British Pounds)
(Editing by Sophie Walker and David Goodman)