The UK’s second biggest supermarket chain Asda today said its price-cutting strategy had paid off in the face of a slowdown in consumer spending.
The Leeds-based group warned growth was slowing generally, but said its own customer numbers increased as it maintained its focus on price in the face of five increases in interest rates.
It added like-for-like sales were still up "in the mid single digits“ in the three months to the end of July, while profits were ahead of its expectations.
The news from Asda mirrored recent updates from Sainsbury’s and Tesco after both saw sales growth slow amid a more competitive and challenging trading environment, especially for non-food.
Additionally, all three supermarkets have faced tougher comparatives from the previous year when the World Cup boosted sales, while the wet weather in June and July has also impacted sales.
Asda is owned by US giant Wal-Mart, which warned today that profits would not meet initial expectations after customers cut their spending because of increased economic pressures. Sales grew by 8.8% to £46 bn during the period. Asda sales make up 10% of its overall sales figures.
Asda has been engaged in a price war with Tesco as the chains battle to win over customers in the tougher economic environment.
A leading investment bank today warned profits were likely to fall if the current turmoil in global credit markets continued.
Swiss giant UBS gave the gloomy prediction despite unveiling a 14% rise in underlying second quarter profits to £1.43bn.
UBS said: ``If the current turbulent conditions prevail throughout the (third) quarter, UBS will see a very weak trading result in the investment bank, offset by predictable earnings from wealth and asset management.
"This makes it more likely that profits in the second half of 2007 will be lower than in the second half of last year.”
Financial stocks have been under pressure in the recent market shockwaves as more expensive borrowing costs threaten to dampen lucrative M&A activity.
Fears have grown over the exposure of leading banks to losses in the US sub-prime mortgage market, leading to increased caution from lenders and higher borrowing costs.
Tycoon Sir Tom Hunter has increased his stake in Dobbies Garden Centres to 27.7%, days after saying he will not rival Tesco’s bid for the chain. Sir Tom’s West Coast Capital group bought 2.7 million Dobbies shares the day after the entrepreneur refused to support Tesco’s £156 million pound buyout of the garden centre chain.
The FTSE-100 index at the close was down 75.5 at 6143.5.
The FTSE Mid-250 index closed down 169.3 at 10998.6.
The pound at 5pm was US$2.0006 compared to US$2.0123 at the previous close while the euro at 5pm was £0.6790 compared to £0.6769 at the previous close.
Read nebusiness tomorrow to find out about the latest job cuts in the engineering sector and discover how a North-East sports brand is set to make the first annual profit in its 10 year history.