Wal-Mart's British supermarket chain Asda slumped to its worst quarterly sales performance in the 16 years it has been owned by the US group, with results on Tuesday highlighting its struggles in the face of an onslaught from the discounters.

Asda and rivals Sainsbury's, Morrisons and market leader Tesco are losing ground in a fierce price war sparked by lower prices at Aldi and Lidl, but industry analysts Kantar Worldpanel said last month that Asda was faring worst.

Its 4.7 per cent decline in like-for-like sales in the 11 weeks to June 30 followed a fall of 3.9 per cent in the first quarter.

Chief executive Andy Clarke described the fall as "a nadir" but said there were "signs of green shoots" since the quarter ended and that the company had the full backing of its parent to continue its strategy of cutting prices while eschewing the money-off vouchers touted by its rivals.

“We continue to navigate a steady course through the worst storm in retail history, despite another challenging quarter,” he said. “I’m here to stay.”

Walmart does not break out profits for its British operation, which trades mainly from large out-of-town stores, but chief financial officer Alex Russo said that profit was holding up. "Behind the negative sales number lies a more positive story for Asda," he said.

Though Shore Capital analyst Clive Black described the sales performance as very disappointing, he said: "They haven't participated in some of the gimmicks and promotions and coupons that others have engaged in, and that's been to the detriment of the top line, but it means that they've got potentially a more robust underlying position than may first suggest."

Asda’s results were announced soon after Sainsbury’s fired its latest salvo in the industry price war, saying that it is to extend a price-matching scheme to online orders. Wal-Mart, meanwhile, reported weaker than expected quarterly earnings and lowered its full-year forecast.

Reuters