Asda suffers Christmas sales slump amid 'fierce' supermarket competition

The company - which is owned by US retail giant Walmart - said the falls came as it faced "fierce" competition in the grocery sector, which had put its market share "under pressure".

The announcement came as the supermarket put further flesh on the bones of its turnaround strategy after revealing plans to invest £500m into cutting prices last month.

The company said the first phase of the price cuts would come into force on Thursday through its Pocket More scheme, which aims to make Asda cheaper than Tesco, Sainsbury's and Morrisons on 1,600 lines.

It also confirmed that it would use the investment to step up its battle against discounters like German rivals Aldi and Lidl.

Andy Clarke, president and chief executive of Asda, said that, amid the continued tough trading environment for grocers, the supermarket's performance was "commendably stable" as some of its rivals had suffered "severe falls in profitability".

He added: "We have steered a careful course through this very turbulent period for the industry and through a complex set of challenges."

The fourth-quarter like-for-like sales to January 1 2016 were worse than analysts expected and continued a tough period for the supermarket, which saw like-for-like sales fall 4.5% in the third quarter.

It second-quarter sales also dropped 4.7% - its worst ever quarterly sales slide.

It comes as Morrisons posted a 0.2% rise in same-stores sales for the nine weeks to January 3, while Tesco reported a 1.3% rise in like-for-like sales over the six weeks to January 9.

Sainsbury's posted a 0.4 like-for-like sales fall in the 15 weeks to January 9, which was lower than expected.

The Big Four supermarkets have come under increased pressure from German discounters Aldi and Lidl, which have carved out a slice of the UK grocery market and sparked a supermarket price war that has seen prices fall for more than a year.