London - Supermarket Asda, the British arm of the world's biggest retailer Wal-Mart, returned to underlying sales growth in its first quarter as price-cuts started to attract thrifty shoppers.

Asda, which trails market leader Tesco, by annual sales and is vying with Sainsbury's to be Britain's No 2 grocer, said like-for-like sales rose 0.1 percent in the 15 weeks to April 20 compared with the same period last year.

That followed a decline of 0.1 percent in its previous Christmas quarter.

Data from market researcher Kantar Worldpanel last week showed UK grocery sales growing at their slowest rate for at least 11 years over the past three months, reflecting price cuts and easing food price inflation.

That data showed Asda was the best performing of Britain's big four grocers, which also include No.4 Morrisons.

All are struggling to hold ground against discounters Aldi and Lidl and upmarket players Waitrose and Marks & Spencer.

Asda began cutting prices to compete with the discounters last year, saying in November it would spend 1 billion pounds on lowering prices over the next five years.

Chief Executive Andy Clarke said on Thursday that the strategy was “paying dividends”.

“We are in the first few months of a five-year journey, but I am confident that we are on the right path - and the numbers we are reporting today, as well as recent Kantar and Nielson data - show that we are moving in the right direction and already making gains,” he said.

Pledges to cut prices have followed from Tesco and Morrisons, while Sainsbury's has vowed to remain competitive, raising analysts' concerns about a possible price war hitting margins and earnings across the industry.

Wal-Mart on Thursday reported a 5 percent drop in quarterly profit as a severe winter in the United States kept shoppers from its stores. - Reuters