August 21, 2018 / 8:11 AM / 8 months ago

UPDATE 2-Sainsbury's lags rivals in UK grocery market -Kantar Worldpanel

    * Sainsbury's sales up 1.2 pct in latest 12-week period
    * Lags growth of 2.6 pct at takeover target Asda
    * Sainsbury's agreed 7.3 bln stg purchase of Asda in April

 (Adds details, analyst comment, shares)
    LONDON, Aug 21 (Reuters) - Sainsbury's, Britain's
second largest supermarket group which has agreed to buy smaller
rival Asda, was again the worst performer of the country's big
four grocers in the latest 12-week period, industry data showed
on Tuesday.
    In April Sainsbury's agreed a 7.3 billion pounds ($9.3
billion) cash and shares takeover of Walmart-owned Asda,
the No. 3 player - a combination that could overtake Tesco
 as Britain's biggest supermarket group.
    Sales at Sainsbury's rose 1.2 percent in the 12 weeks to
Aug. 12, market researcher Kantar Worldpanel said.
    While that was Sainsbury's fastest rate of growth since
January, it lagged Asda's growth of 2.6 percent, growth of 2.7
percent at No. 4 Morrisons and 1.8 percent at Tesco.
    "Sainsbury's have a lot on their plate at the moment and are
also undergoing a period of price re-sets, bringing everyday
prices lower," said Fraser McKevitt, head of retail and consumer
insight at Kantar Worldpanel.
    "That has had the effect of removing some value from what
they're selling but has not yet brought the volume uplifts to
replace that."
    Last week Asda reported a 0.4 percent rise in like-for-like
sales for its fiscal second quarter - a fifth straight quarter
of underlying growth - and said it had outperformed the market
for the first time in four years. 
    Last month Sainsbury's reported only a 0.2 percent rise for
its first quarter and said trading had not been disrupted by the
takeover deal.
    "Despite not having the benefit of recovering from a
collapse in prior years like Tesco and Morrisons do, Sainsbury's
continues to perform poorly on Kantar data and slow sales growth
will make it harder to rebuild profitability," said Bernstein
analyst Bruno Monteyne.
    Shares in Sainsbury's were up 0.4 percent at 0930 GMT,
Morrisons was 0.9 percent higher and Tesco was down 0.4 percent.
    The Sainsbury's/Asda deal is currently being looked at by
Britain's regulator, the Competition and Markets Authority, and
if approved is not expected to complete until the second half of
    Kantar Worldpanel's data showed Morrisons was alone among
the big four in maintaining its market share, the other three
continuing to lose ground to German-owned discounters Aldi
            and Lidl, which are opening new stores aggressively.
    Aldi and Lidl's sales rose 12.6 percent and 8.6 percent
respectively in the 12 weeks to Aug. 12.
    Sales at the Co-operative rose 7.8 percent, its
fastest rate of growth in nearly seven years.
    Total grocery market growth was 3.5 percent, while grocery
inflation for the 12 week period was 1.9 percent, Kantar
Worldpanel said.
    Prices are rising fastest in markets such as cola, butter
and canned fish, it said.
    Market share (percent) and sales growth (percent).
                  12 wks to     12 wks to     pct change
                  Aug. 12 2018  Aug. 13 2017  in sales
 Tesco            27.4          27.9          1.8
 Sainsbury's      15.5          15.9          1.2
 Asda             15.2          15.3          2.6
 Morrisons        10.4          10.4          2.7
 Aldi             7.6           7.0           12.6
 Co-operative     6.6           6.3           7.8
 Lidl             5.5           5.2           8.6
 Waitrose         5.0           5.1           2.4
 Iceland          2.1           2.1           3.8
 Ocado            1.2           1.1           8.5
 Source: Kantar Worldpanel
 ($1 = 0.7841 pounds)

 (Reporting by James Davey; Editing by Costas Pitas and Mark
Potter and Susan Fenton)
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