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Bargain-hunting food shoppers are boosting sales and profits at Asda, the UK's second biggest supermarket chain.
The Wal-Mart owned grocer, which has 350 UK stores, said today that like-for-like sales, excluding the impact of petrol, grew 6.9% in the three months to the end of September.
The sales figure is boosted by recent food price inflation, but the supermarket, which has a particularly low-cost image - is growing far faster than the market and some of its main rivals.
Sainsbury's like-for-like sales over a similar periods were ahead 4.3%, while Tesco reported a 4% rise in sales in the three months to August 23.
Asda has been running special offers at 50p and £1 and has led the way in cutting the cost of petrol in a bid to pull in shoppers.
The 6.9% sales growth achieved compares with 6% in the preceding three months and 5% in the first quarter of the year.
Asda said it is attracting more shoppers, especially from the AB social groups who are boosting sales of meat, chilled foods and wine. Huge numbers of wealthier shoppers have changed their shopping habits and traded down from upmarket foodstores like M&S to cheaper brands and stores as the economic downturn has taken hold.
The grocer also claimed that sales of non-food products - from homewares to DVDs - "have outperformed all major general merchandise retailers". Bestsellers include baby goods, music, video and computer games.
The George fashion label, it said, had performed well "in a difficult market". The supermarket sold 250,000 black coats priced at £15 in just 10 days.
Asda's performance was revealed as Wal-Mart said its earnings would be at the very bottom of previous forecasts - or maybe even lower.
In August the world's biggest retailer had expected to earn up to $3.50 a share. Now it anticipates full-year earnings could be only $3.42 a share.
Asda finance director Judith McKenna said the grocer's sales figures were "another strong set of numbers" and the result of focusing on quality and value.
She denied Asda was turning the screw on its suppliers to provide lower prices, but said the grocer was demanding the best possible deals: "We always like to say we have a healthy relationship with our suppliers. But that doesn't mean we are soft on them, we will absolutely drive a hard bargain."
The grocer also said it would object to any moves to impose minimum prices on alcohol amid mounting public and political pressure to take action on binge drinking. Asda said alcohol abuse was a problem in society and that price controls would be "a sledgehammer to crack a nut".
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