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Asda Says Competitors’ Discounts Weighed on April Sales Growth

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May 16 (Bloomberg) -- Asda, the U.K. supermarket chain owned by Wal-Mart Stores Inc., said competitors’ promotions weighed on sales growth at the start of the second quarter.

“We had a pretty tough April, precisely because of the level of vouchering activity,” Chief Financial Officer Richard Mayfield told reporters today, referring to rivals’ coupons. “Since that finished, our sales are pretty strong again.” Still, “what that means in terms of how that averages out depends on whether there is more vouchering activity.”

First-quarter sales at stores open at least 12 months rose 1.3 percent from a year earlier, excluding fuel and value-added tax, the Leeds, England-based retailer, also said. That’s the fastest growth in a year and up from 0.1 percent in the previous quarter.

U.K. grocers are fighting for market share as consumers seek out lower prices, boosting sales at discounters like Aldi and Lidl. The country’s second-largest supermarket chain has so far maintained its share after lowering prices on essential items such as milk, eggs, bread and butter and vowing to be 10 percent cheaper than Tesco Plc, J Sainsbury Plc, William Morrison Supermarkets Plc and Waitrose.

“Consumers are not looking for yo-yo pricing,” Asda Chief Executive Officer Andy Clarke said. “Vouchering is unsustainable in our view.”

Asda is scaling back the number of store openings this year to 12 new stores, compared with 23 last year, Mayfield said. The bulk of the company’s 700 million-pound investment this year will be to expand digital services such as online delivery.

Online sales grew 16 percent in the first quarter and the company will more than double its Click & Collect facilities for groceries to 200 locations this year.

Wal-Mart, the world’s largest retailer, today forecast second-quarter profit that was less than analysts estimated as shoppers struggle amid the slow U.S. economy and higher taxes.

Earnings per share will be $1.22 to $1.27, the Bentonville, Arkansas-based company said today. Analysts had projected $1.29, the average of 24 estimates compiled by Bloomberg.

To contact the reporter on this story: Gabi Thesing in London at gthesing@bloomberg.net

To contact the editor responsible for this story: Celeste Perri at cperri@bloomberg.net

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