Asda Sales Take A Dive In Supermarket 'Storm'

Asda sales took a 4.7% hit in the second quarter as the "worst storm in retail history" shakes the UK supermarket sector.

Asda, which is owned by US retail giant Wal-Mart, has been battling Sainbury's for second place in the UK grocery market share.

Last month it lost the number two spot to Sainsbury (Amsterdam: SJ6.AS - news) 's for only the third time in 12 years.

The latest industry data from Kantar Worldpanel showed that Asda's sales fell 2.7% in the 12 weeks to July 19 compared with a year ago, giving it a market share of 16.4%.

Sainsbury’s saw a 0.3% fall in sales but its market share now sits at 16.5%.

The relative success of Sainsbury's was partly attributed to its "local" convenience outlets and faster market growth in the south of the country, where it operates a larger number of stores.

Asda does not operate convenience stores.

Each of the UK's big four supermarkets have fallen victim to the fierce price war as they look to stop losing customers to discount retailers such as Lidl and Aldi.

According to Kantar Worldpanel, grocery prices are 1.6% lower than they were last year, meaning that prices have been falling since September 2014 - and they are not projected to start rising again until early 2016.

Because Asda is part of Wal-Mart it is not obliged to publish its profit figures, but Asda boss Andy Clarke said the supermarket had weathered "worst storm in retail history".

Alex Russo, Asda's chief financial officer, said that profits for the quarter were flat year on year, which is unlike the other big supermarkets which all saw falls.

He stressed that all supermarkets will have to work on the assumption that discount traders will double their market share.

Aldi and Lidl currently control 5.6% and 4% of the UK grocery market respectively.

Wal-Mart shares were 2.9% lower in pre-market trading in New York, after falling more than 15% since the beginning of the year.