Asda revealed a drop in sales amid fierce supermarket competition

Asda has revealed a 5.3% drop in like-for-like sales in its second quarter, as the UK supermarket lost market share and lagged rivals Tesco (LSE:TSCO) and Sainsbury (LSE:SBRY).

Revenue (excluding fuel) was down 2.2% to £5.3 billion for the quarter, according to a statement.

Asda highlighted that it had seen growth in online sales with groceries volumes up 1.4% whilst online clothes sales via the George brand were up 3.9%.

It also claimed that the ‘price inflation’ in its stores was “below market average”, and said that 53% of all customer transaction benefitted from its Asda Rewards loyalty scheme.

The unlisted supermarket - which is majority owned by Mohsin Issa and TDR Capital – had £3.9 billion of net debt at the end of the quarter, and it noted that it is investing around £50 million on store upgrades.

Thursday’s trading update follows Kantar supermarket survey data in July placed ASDA as the UK’s third largest supermarket by market share, at 12.7% from 13.6% a year ago.

In the July survey, Tesco had 27.7% (from 27% last July) of the market and Sainsbury had 15.3% (from 14.9%).

“We remain committed to maintaining our value credentials, enhancing the product offer, and executing our long-term growth strategy to build an even stronger Asda for our customers and communities,” co-owner Mohsin Issa said in the statement.

Asda chief financial officer Michael Gleeson, meanwhile, added: “We have made great progress over the last few years in transforming Asda into a diversified retail group, much of which is almost complete.

“However, we also know that there are some areas where we can and need to improve.”