Asda Q1 sales flat, says April was better

LONDON Tue May 17, 2011 1:07pm BST

A worker fills shelves at an ASDA supermarket in Oldham, northern England, January 5, 2011. REUTERS/Phil Noble

A worker fills shelves at an ASDA supermarket in Oldham, northern England, January 5, 2011.

Credit: Reuters/Phil Noble

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LONDON (Reuters) - Asda, the British arm of U.S. retailer Wal-Mart (WMT.N), said sales growth almost ground to a halt in the first three months of this year, though it picked up in April thanks to a late Easter and the royal wedding.

Britain's second-biggest supermarket chain behind Tesco (TSCO.L) said on Tuesday sales at shops open over a year rose 0.1 percent excluding fuel and VAT sales tax in the three months ended March 31, down from 1.6 percent growth the quarter before.

British retailers have struggled as shoppers grapple with higher prices and austerity measures. While a late Easter and celebrations around the wedding of Prince William to Kate Middleton helped to boost sales in April, many expect tough trading conditions to resume this month.

Asda lagged sales growth at most of its main rivals in 2010, but has fought back in recent months, helped by a 100-million pound relaunch of its own-brand groceries.

Tesco reported a 0.7 percent drop in underlying sales in the final quarter of its financial year ended February, while J Sainsbury (SBRY.L) delivered a rise of about 0.2 percent for the 10 weeks to March 19.

Earlier this month, Wm Morrison Supermarkets (MRW.L) posted a 2.5 percent rise in underlying sales for the 13 weeks to May 1, helped by a strong April.

Asda said adjusting for the timing of Easter first-quarter sales rose 0.8 percent, while operating income was essentially flat excluding pension changes and costs related to its recent acquisition of Netto UK stores.

The chain also said it was investing a further 27 million pounds in improving the quality of its fresh food business.

Parent company Wal-Mart, meanwhile, beat first-quarter profit forecasts.

(Reporting by Mark Potter, editing by James Davey)

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