Asda is a wounded giant this morning as the papers report on a poor first quarter – worse than Tesco, Morrisons and Sainsbury’s – for Britain’s second biggest supermarket. The Times said the “ferocious” price war raging in the big grocers had led to the worst drop in checkout receipts for more than five years for Asda. The 3.9% like-for-like sales slump prompted CEO Andy Clarke to admit that the company was finding trading difficult.

Clarke added he would stick to the plan of cutting prices and investing in its large stores. The Guardian said it was Asda’s worst sales figures since the 1990s, which confirmed it was now the poorest performing of the big four supermarkets. “However, it is understood that the last time Asda performed so badly was back in the days ahead of its 1990s turnaround under Archie Norman and Allan Leighton,” the paper added.

The drop in sales came in what Andy Clarke said was the “most challenging year yet” for UK supermarkets (The Telegraph).

The Financial Times reports on the pain of Asda’s parent group Walmart. “A restrained US consumer weighed on Walmart’s sales in the first quarter, highlighting the tricky waters the world’s largest retailer and its American rivals are navigating despite lower fuel prices and wage increases,” the FT added. Operating profit at Walmart dropped 8.3% to $5.7bn in the three months ended April 30, as sales dropped 0.1% to $114bn.

Collapsing food and fuel prices have led Britain into deflation for the first time since the sixties. The consumer prices index of inflation fell to -0.1% in April, after threatening to turn negative for months, according to the latest figures from the Office for National Statistics. (The Times) (The Telegraph)

On the day the UK slipped into deflation, two of the country’s biggest food groups — Greencore and Premier Foods — said falling prices would not get in the way of their growth plans (The Financial Times). Premier Foods CEO Gavin Darby said he was “more confident than ever” that his strategy to concentrate on power brands such as Bisto and Mr Kipling was working as the decline in sales slowed again. Sandwich maker Greencore reported a sharp rise in half-year pre-tax profits to £26.3m on sales up 3% at £639.8m.

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