Asda sales growth dampened by the bad weather

The Leeds-based chain said like-for-like sales rose 0.7 per cent in the 13 weeks to June 30.

This was down on the 2.2 per cent growth in the first three months of 2012.

Asda’s chief executive Andy Clarke said sales rose by 1.5 per cent in the first half of the year.

“We see that as a very solid performance in a tough and slowing market. We’re the first of the retailers to report. The Kantar data shows we have gained 0.5 per cent market share,” he said.

The increase in market share gave Asda a 17.3 per cent share of the grocery market, showing that it has grown sales faster than all of its main UK rivals over the last three months.

Market leader Tesco has stepped up promotions and vouchers following a shock profits warning in January, while the third biggest player Sainsbury’s has introduced its price match guarantee.

Asda’s finance director Rob McWilliam criticised rivals for launching unsustainable promotions.

“There are an increasing number of promotions, vouchers and gimmicks out there to try to disguise a weak price position,” he said.

“A key part of our strategy is to help customers save money on a sustainable basis day in day out.”

Referring to the slowdown in the second quarter he said the three months covered the wettest period in the UK for over 100 years.

“One of our top sellers was umbrellas where sales were up 88 per cent. We did particularly well during the Jubilee and edible grocery did very well over the second quarter,” he said.

The group has seen continuing trend towards budgeting with people buying petrol in £10 or £20 top-ups rather than filling the tank.

People are also waiting for pay day before they stock up.

Following customer demand it now stocks £5 notes in its cashpoint machines.

“We were really surprised by how popular it has been,” said Mr McWilliam.

“It’s another example of customers taking increasing levels of control in how they manage their cash flow”

Asda lagged Britain’s grocery market in 2010, but has been boosted by a re-launch of its own-brand food range under the ‘Chosen by you’ banner.

“We continue to outperform the market driven by our determination to deliver on price and continue our journey on quality,” said Mr Clarke.

“Some people thought Asda would only be known for price, but we’ve invested over £100m on food quality development.”

Asda said that 81 per cent of mums who shop at the store said quality is still important despite the economic downturn.

Next month it will launch a new range of 70 Extra Special ready meals, which will include beef bourguignon and lamb shank with caramelised onion and port sauce.

Asda has also had success with its price guarantee which refunds customers the difference if their shopping isn’t at least 10 per cent cheaper than its rivals.

The scheme saw 600,000 online checks a week in the three months to June 30, up from about 500,000 in the previous quarter.

Asda, which is owned by US retail giant Wal-Mart, reported strong online growth, with sales up 22 per cent in the quarter.

Wal-Mart reported a 4.5 per cent increase in sales to £72.9bn in the three months to July 31. This was lower than the market had expected.

Net income rose 5.7 per cent to £2.6bn.

Doug McMillon, Wal-Mart International president and CEO, said: “The UK had a strong second quarter, growing sales, and growing operating income faster than sales, excluding fuel.

“Despite a difficult consumer environment and the wettest weather on record, Asda gained market share in the second quarter.

“Asda’s continued commitment to EDLP (every day low pricing) was recognised by The Grocer magazine in June.

“Asda has been named Britain’s Lowest Priced Supermarket for the fifteenth year running and Britain’s Favourite Supermarket for the second year in a row.”

He added that UK gross profit rate has increased slightly from last year due to strong inventory control in non-food merchan-dise.

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