Sainsbury's lags rivals in UK grocery market - Kantar Worldpanel

LONDON (Reuters) - Sainsbury's SBRY.L, Britain's second largest supermarket group which has agreed to buy smaller rival Asda, was again the worst performer of the country's big four grocers in the latest 12-week period, industry data showed on Tuesday.

Slideshow ( 4 images )

In April Sainsbury's agreed a 7.3 billion pounds cash and shares takeover of Walmart-owned WMT.N Asda, the No. 3 player - a combination that could overtake Tesco TSCO.L as Britain's biggest supermarket group.

Sales at Sainsbury’s rose 1.2 percent in the 12 weeks to Aug. 12, market researcher Kantar Worldpanel said.

While that was Sainsbury's fastest rate of growth since January, it lagged Asda's growth of 2.6 percent, growth of 2.7 percent at No. 4 Morrisons MRW.L and 1.8 percent at Tesco.

“Sainsbury’s have a lot on their plate at the moment and are also undergoing a period of price re-sets, bringing everyday prices lower,” said Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel.

“That has had the effect of removing some value from what they’re selling but has not yet brought the volume uplifts to replace that.”

Last week Asda reported a 0.4 percent rise in like-for-like sales for its fiscal second quarter - a fifth straight quarter of underlying growth - and said it had outperformed the market for the first time in four years.

Last month Sainsbury’s reported only a 0.2 percent rise for its first quarter and said trading had not been disrupted by the takeover deal.

“Despite not having the benefit of recovering from a collapse in prior years like Tesco and Morrisons do, Sainsbury’s continues to perform poorly on Kantar data and slow sales growth will make it harder to rebuild profitability,” said Bernstein analyst Bruno Monteyne.

Shares in Sainsbury’s were up 0.4 percent at 0930 GMT, Morrisons was 0.9 percent higher and Tesco was down 0.4 percent.

The Sainsbury’s/Asda deal is currently being looked at by Britain’s regulator, the Competition and Markets Authority, and if approved is not expected to complete until the second half of 2019.

Kantar Worldpanel’s data showed Morrisons was alone among the big four in maintaining its market share, the other three continuing to lose ground to German-owned discounters Aldi and Lidl, which are opening new stores aggressively.

Aldi and Lidl’s sales rose 12.6 percent and 8.6 percent respectively in the 12 weeks to Aug. 12.

Sales at the Co-operative 42TE.L rose 7.8 percent, its fastest rate of growth in nearly seven years.

Total grocery market growth was 3.5 percent, while grocery inflation for the 12 week period was 1.9 percent, Kantar Worldpanel said.

Prices are rising fastest in markets such as cola, butter and canned fish, it said.

Reporting by James Davey; Editing by Costas Pitas and Mark Potter and Susan Fenton