Like-for-like sales at Asda grew by 0.5% in the second quarter, excluding VAT, the supermarket revealed today.

US parent Walmart said conditions remained challenging and vowed to accelerate its plans to open smaller-format stores to speed up growth.

It describing Asda’s performance as “solid” but admitted that operating profits over the period to 30 June had fallen due to a $31m (£18.9m) outlay converting former Netto stores.

The growth represents an improvement on the first quarter, when sales inched up by just 0.1%. And Asda said it had yet to reap the rewards in sales from the conversion of the former Netto business.

“Adjusting for fuel sales and Netto, Asda grew operating income faster than sales,” said Walmart international president Doug McMillon, adding that the supermarket giant had become leaner elsewhere in its operation. “Economic indicators suggest that 2011 will remain a challenging year for our UK consumers,” he said.

He added: “We’re confident that Asda and its Netto store conversions are entering the second half of the year with good momentum, delivering availability and everyday low prices.”

Yesterday Asda chief executive Andy Clarke and operations director Karen Hubbard revealed plans to speed up growth plans for Asda's smaller-format stores. Asda claimed footfall in the 61 former Netto stores it has so far converted has increased by 60%.

But Clarke was cagey over speculation that Asda could bid for Iceland, saying many of the frozen specialist’s stores were either too small or lacked car parking to fit Asda’s model.

Meanwhile, group income at Walmart rose 5.7% in the second quarter to $3.8bn, with total revenues up 5.4% to $109.3bn. But the world’s largest retailer warned over continuing uncertainty in trading conditions in its US heartland.

Read more
Clarke ponders Iceland move as Asda ups small store target (16 August 2011)
Netto ‘space opportunity’ fee stuns Asda suppliers (11 June 2011)
Is Walmart really planning a triumphant return to Europe? (analysis; 28 May 2011)