UK Markets close in 4 hrs 30 mins

Asda overtakes suitor Sainsbury to become UK's No. 2 supermarket - Kantar

FILE PHOTO: Shopping bags from Asda and Sainsbury's are seen in Manchester, Britain April 30, 2018. REUTERS/Phil Noble/illustration/File Photo

LONDON (Reuters) - Sainsbury has lost its status as Britain's No. 2 supermarket group by market share to takeover target Asda for the first time in four years, industry data showed on Tuesday.

Sainsbury's sales fell 1.8 percent over the 12 weeks to March 24, reducing its market share to 15.3 percent from 15.8 percent in the same period last year, researcher Kantar said.

That meant Asda, the British arm of U.S. retailer Walmart, overtook Sainsbury with a market share of 15.4 percent as its sales edged up 0.1 percent, though Sainsbury remained the biggest seller of food and drink of the two.

Sainsbury argues that Kantar under-reads its general merchandise market share. This is because since acquiring Argos in 2016, Sainsbury has streamlined general merchandise ranges in its stores in favour of Argos ranges. However, Argos' sales are not captured by Kantar.

Sainsbury's agreed 7.3 billion pound takeover of Asda is being considered by Britain's competition regulator.

The Competition and Markets Authority (CMA) said last month its initial view was that the deal should be blocked in the absence of the sale of a large number of stores, or even one of the brands. A final report is due by April 30.

"Walmart's subsidiary seems to be holding up much better to the growing Sainsbury's merger uncertainty," said analysts at Jefferies.

Sainsbury shares, down 26 percent over the last six months, were down 0.9 percent at 232.5 pence by 0825 GMT, giving it an equity value of 5.1 billion pounds.

Kantar's data also showed Tesco's sales rose 0.5 percent in the period and it remained the clear market leader with a share of 27.4 percent. Sales at No.4 player Morrisons fell 0.1 percent, giving it a market share of 10.3 percent.

However, all of Britain's big four supermarkets lost market share to German-owned discounters Aldiand Lidl. Their sales increased 10.6 percent and 5.8 percent respectively, giving them a combined market share of 13.6 percent.

Kantar said overall UK grocery sales grew 1.4 percent in the period, the slowest rate since March 2018, reflecting a later Easter this year and Mother's Day falling outside the reported period.

The market researcher said grocery inflation was 1.5 percent over the 12 weeks. Prices are rising fastest in markets such as cola, crisps and chilled deserts, while falling in instant coffee, fresh sausages and nuts.




(Reporting by James Davey; Editing by Paul Sandle and David Holmes)