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Asda notches up fourth straight quarter of like-for-like sales growth ahead of Sainsbury’s merger

Excluding the impact of the long Easter weekend, Asda saw like-for-like sales rise 1%, an acceleration from the 0.5% rate of growth it enjoyed in the prior quarter
asda store
The Asda-Sainsbury’s merger is expected to come under close scrutiny from regulators

Britain’s third-largest supermarket chain, Asda, has reported a fourth straight quarter of sales growth ahead of its proposed £15bn merger with J Sainsbury plc (LON:SBRY).

Asda, which is owned by US retail behemoth Walmart Inc (NYSE:WMT) saw like-for-like sales – a key industry metric – rise 3.4% in the three months ended March 31, its fiscal first quarter.

READ: Sainsbury's confirms £15bn Asda merger

Excluding the impact of the long Easter weekend which was included this time around, like-for-likes grew a steady 1.0% - an acceleration from the 0.5% rate of growth seen in the prior quarter.

“Our Q1 performance – even when adjusted for increased sales from an early Easter – represents genuine momentum,” said Asda’s chief executive Roger Burnley.

Competition among UK food retailers has been fierce for a while now and Asda, like its peers, has been trimming its prices to try to attract more customers.

That strategy paid off in the quarter, with the supermarket adding almost a quarter-of-a-million new customers.

As a result, Asda’s gross profit rate fell with last year, although operating income increased.

Walmart boss Doug McMillon said he was “pleased with the response of [his] UK colleagues” following the Asda-Sainsbury’s proposal.

The two think they can generate buying power and savings to better compete with a resurgent Tesco PLC (LON:TSCO) and the ever-growing German discounters, Aldi and Lidl.

There is also the threat from Amazon.com Inc (NASDAQ:AMZN), which entered the space last year with its multi-billion-dollar acquisition of Whole Foods.

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