Asda sales grow again after three-year slump

Supermarket chain Asda has reported its first quarterly like-for-like sales growth for three years.

Sales rose 1.8% in the second quarter after a bumper Easter, helped by price cuts and more customers shopping at its stores.

Removing the benefit of Easter from the results, Asda's like-for-like sales were 0.7% higher.

Asda, owned by US giant Walmart, has been hurt by the rise of German discounters Aldi and Lidl.

Last year Asda reported its worst quarterly performance on record, with sales tumbling by 7.5%.

Walmart chief executive Doug McMillon said the world's biggest retailer was "encouraged" by the performance of its UK operation.

"In June, I visited Asda to see the progress being made. Customers are responding to investments in price and store experience by visiting the stores more often and increasing their basket sizes," he said.

"There's still much more to be done, but we're clearly headed in the right direction."

Analysis: Emma Simpson, BBC business correspondent

Is Asda finally on the road to recovery? It's been a painful few years.

They're not popping the champagne corks in Leeds just yet.

If you strip out the Easter effect, Asda's growth was 0.7% on a comparable basis to last year.

And it highlighted this figure in its financial update for good reason. Bosses want to dampen down expectations for the quarters to follow.

So how much of this figure is driven by inflation, which is giving a lift to all the supermarkets right now?

Well I'm told that 0.7% would still be positive even if you strip out the effects of inflation at Asda.

In other words there's finally some growth in shopper numbers and volumes coming through.

But Asda's growth is still way behind the other main players. This is a business that's still got a huge amount to do.

Asda is the third-largest UK supermarket chain behind Tesco and Sainsbury's, according to Kantar Worldpanel.

The supermarket's chief executive Sean Clarke took over from Andy Clarke (no relation) last summer.

The new chief's strategy to halt falling sales has been to focus on lowering prices.

Asda said that its second quarter had seen "one of its most successful Easter trading periods on record", with total sales up 16%.

Mr Clarke said 275,000 new customers shopped at Asda in the second quarter, but added: "We know we need to continue to up our game to be in the best shape possible."

In the first quarter, the chain suffered a 2.8% sales decline - its eleventh consecutive quarterly drop.

Meanwhile, Walmart reported lower quarterly margins after it cut prices and invested in expanding online sales. The retailer's shares opened down 2%, the biggest faller on the Dow Jones index.