LONDON (Reuters) - Asda, the British arm of the world's biggest grocer Wal-Mart (N:WMT), said underlying sales fell in its third quarter, hit by subdued consumer spending and sliding prices.
Asda, which trails market leader Tesco (L:TSCO) by annual sales and is vying with Sainsbury's (L:SBRY) to be Britain's No. 2 grocer, said on Thursday sales at stores open over a year, excluding petrol, fell 1.6 percent in the 13 weeks to Sept. 30.
The drop compares with a 0.6 percent rise in like-for-like sales in its second quarter, and comes after recent sales falls at Sainsbury's, Tesco and Morrisons (L:MRW), with the latter two issuing profit warnings this year and Tesco also hit by an accounting scandal.
Asda said it was the only one of Britain's "big four" grocers to have grown market share in the period, with others losing to fast-growing German discounters Aldi [ALDIEI.UL] and Lidl [LIDUK.UL].
"The last quarter has seen a shockwave go through our industry and others are starting to respond to the challenges they face. I expect that we will see another tough quarter and I'm under no illusions that the battle continues to rage," Asda chief executive Andy Clarke said.
Asda was the first of Britain's leading grocers to attempt to stem the loss of shoppers to Aldi and Lidl by cutting prices.
A year ago it said it would spend 1 billion pounds on lower prices over five years, aiming to narrow its price gap with discounters.
Tesco, Morrisons and Sainsbury's have followed with cuts of their own, fuelling an escalating price war.
British consumers are shopping around for the best prices, buying little and often and wasting less, increasingly opting for convenience stores or online shopping.
According to market researcher Kantar Worldpanel the overall UK grocery market grew 0.7 percent in the 12 weeks to Oct. 12, with like-for-like prices down 0.2 percent.
Separately on Thursday, Wal-Mart reported a 2.9 percent increase in third-quarter revenue.
(Reporting by James Davey; Writing by Neil Maidment; Editing by Mark Potter)