Business

Asda sales tumble in third quarter

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Asda's torrid year has continued as the supermarket reported another big slide in sales in the third quarter.

Sales excluding fuel at stores open for more than a year fell 5.8% in the three months to September.

That was slightly better than the 7.5% slide reported by the supermarket for the three months to June - its worst quarterly performance.

The results are the first under new chief executive Sean Clarke, who took over on 11 July.

He said: "We have lowered thousands of prices, improved hundreds of own-brand products and invested in more hours for colleagues on the shop floor - so it's encouraging to see more customers shopping with us in stores and online."

But analysts said that reviving the supermarket's fortunes will be tough because it can no longer market itself as being the cheapest supermarket on the High Street.

Fiercely competitive

Asda, which is owned by US retail giant Walmart, is battling to retain its place in a fiercely competitive market amid more store openings from German discounters Lidl and Aldi.

"Asda's positioning has plunged it into crisis," said Patrick O'Brien, analyst at Verdict Retail.

"The discounters have undermined its low price stance, but it is unable to position its brand or customer experience as offering more than the discounters, in the way that its Big Four rivals have been able to do,"

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Image caption Aldi and Lidl's entry into UK market has hit Asda hard

Asda is the UK's third-biggest supermarket, behind Tesco and Sainsbury's, with Morrisons in fourth place.

"The others never traded on being the cheapest, but Asda did, and now it isn't, so unless Walmart wants to use its financial muscle to take the price war to a new level, it must demonstrate new reasons for shoppers to go there," said Mr O'Brien.

Asda said in September it was cutting prices on thousands of everyday items by an average of 15% as part of a campaign that has also seen the chain improve the quality of its own-brand ranges.

Sales of its premium own-label range rose 8% in the most recent quarter, according to research firm Kantar Worldpanel, although Asda's overall share of the grocery market slipped one percentage point to 15.6%.

Walmart disappoints

Asda's parent company Walmart also disappointed investors its latest sales performance.

Walmart said like-for-like sales excluding fuel at its US stores rose by a slightly lower than expected 1.2% for the three months to October.

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Profits at the world's largest retailer fell to $3.03bn from $3.3bn in the same period last year.

Walmart's chief financial officer Brett Biggs told Reuters that falling food prices continued to be "challenging" for the retailer.

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