Sainsbury's bucks sales downtrend among big UK supermarkets

LONDON (Reuters) - Sainsbury's (SBRY.L) was the only one of Britain's big four supermarkets to increase overall sales, industry data published monthly showed, helped by the popularity of its online and convenience businesses, though even its market share was flat.

Britain's second largest supermarket's sales rose 0.5 percent year-on-year in the 12 weeks to Feb. 28, market researcher Kantar Worldpanel said on Tuesday, an outcome that represents the longest run of growth for any of the big four since March 2013.

Its shares were down 0.5 percent by 1022 GMT, outperforming a 1 percent fall in the FTSE 100 (.FTSE) index.

Sainsbury's, considering raising its takeover proposal for Argos owner Home Retail (HOME.L) after South African group Steinhoff International (SNHG.DE) trumped its offer, will be keen to see its share price supported, given that part of its proposed offer is in shares.

Sainsbury's maintained its market share at 16.8 percent as Britain's overall grocery market also grew at 0.5 percent.

That market growth was the fastest rate since October 2015 but was still held back by an industry price war and falling grocery prices, which were down by 1.6 percent.

Falling prices reflect the impact of discounters Aldi [ALDIEI.UL] and Lidl [LIDUK.UL], and the market’s competitive response, as well as deflation in items such as eggs, butter and crisps.

Market leader Tesco (TSCO.L), third largest group Asda and number four Morrisons (MRW.L) all lost market share to Aldi and Lidl, who recorded growth of 15.1 percent and 18.9 percent respectively.

Sales at Tesco fell 0.8 percent. That was, however, a continuation of an improving trend as sales had fallen 1.6 percent in last month's data. Its shares rose 2.7 percent.

"A renewed focus on price promotions has helped stem the flow of shoppers leaving (Tesco) despite the closure of around 50 stores in the last year," Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, said.

Morrisons is also operating fewer stores than last year which continues to contribute to its falling sales, down 3.2 percent in the period.

The company, which last week announced a tie-up with online giant Amazon (AMZN.O), will report annual results on Thursday. Its shares fell 2.5 percent.

Asda, the British supermarket arm of Wal-Mart (WMT.N), remained the sector's laggard, with its sales falling 4.0 percent.

Number five player, the Co-operative [42TE.L], which announced more price cuts last week, grew sales by 1.9 percent, increasing its market share to 6.0 percent.

(Reporting by James Davey; Editing by Keith Weir and Jane Merriman)