Asda sales higher on budget demand

Supermarket chain Asda today said sales of its budget ranges were more than 20% higher as customers focused on bargains in the face of rising costs.

The UK’s second biggest grocer – part of the Wal-Mart group – said the jump for its Smartprice and Extra Special products helped boost underlying sales growth during the second quarter to 6%, compared with 5% for the first quarter.

Surveys have shown the lower-priced segment of the supermarket sector has attracted more customers in recent months as households look to offset rising fuel, energy and food costs.

Latest figures from TNS Worldpanel showed that Asda’s sales grew by an industry-beating 9% during the 12 weeks to July 13. No frills rivals such as Aldi and Lidl performed even better, enjoying year-on year growth of 19.5% and 14.3% respectively.

The retailer has launched a raft of price-cut initiatives in recent months, including slashing the price of its top ten selling core groceries such as bread, eggs and fruit to 50p during a weekend in June.

Rivals have also launched price-cuts this year, with Tesco today announcing it will have 18,000 products on promotion this week.

Asda’s chief financial officer Judith McKenna said the retailer’s low prices were “undoubtedly more important than ever”.

“Today’s figures demonstrate that our strategy is continuing to deliver results.

“However we won’t be complacent, we’ve got tough conditions ahead of us and must continue to focus on driving costs out of our business so that we can continue to offer customers value for their hard-earned money.”

Wal-Mart director Charles Holley added: “Asda is gaining market share at the fastest rate in many years. In addition, Asda surpassed its plans for both sales and operating income, in spite of a slowing economy.”

Food inflation hit 13.7% last month, official data showed this week, with more expensive meat, milk and bread the main drivers.

Asda opened two new food stores in the second quarter, taking the total to 331, and an extra two new Asda Living stores on top of the 14 existing sites.

The retailer’s figures contributed to an in-line second quarter performance from its parent group Wal-Mart Stores, the world’s biggest retailer.