Britain's Asda returns to sales growth as shoppers snap up value range

FILE PHOTO: Shoppers walk past the UK supermarket Asda in Leeds

By James Davey

LONDON (Reuters) - British supermarket group Asda returned to underlying sales growth in its latest quarter, helped by the popularity of its new value range amongst cash-strapped shoppers, it said on Friday.

The group, Britain's third largest grocer after market leader Tesco and Sainsbury's, said on Friday its like-for-like sales, excluding fuel, rose 4.7% in the three months to Sept. 30, its fiscal third quarter, having fallen 1.9% in the second quarter.

The outcome was its strongest quarterly performance since the first quarter of 2021.

Total revenue, excluding fuel, was 5.2 billion pounds ($6.1 billion) for the period.

Britons are struggling with rising living costs that show no sign of easing. With inflation at a 40-year high of 10.1% and consumer confidence close to the gloomiest on record, they are seeking to make savings.

Supermarkets are selling more own-label goods, which are generally cheaper than branded goods. Sales of the cheapest-value own-label ranges are soaring.

Asda, owned since last year by brothers Mohsin and Zuber Issa and private equity company TDR Capital, launched its "Just Essentials" range in May.

In the third quarter it expanded the range to 270 products, including cupboard staples such as rice, pasta, tinned tomatoes and tuna.

Citing industry data from market researcher Kantar, Asda said 10 million people shopped the range in the quarter, with 400,000 shoppers switching to the group from other supermarkets.

Kantar's data is currently showing Asda to be the fastest growing of Britain's traditional big four supermarkets, which also includes Morrisons.

Asda, which trades from over 600 stores and online, has also locked the prices of 250 "family favourite" products for the rest of the year, and launched a new loyalty programme.

"The financial pressures on families across the UK (are) worsening and they are looking to us for help," said Mohsin Issa.

For Christmas, Asda is launching 740 new products and recruiting up to 6,000 temporary workers.

Last week Sainsbury's beat first-half results estimates and stuck to its full-year profit outlook.

In October, Tesco trimmed its full-year profit outlook.

($1 = 0.8491 pounds)

(Reporting by James Davey; editing by Sarah Young)