(Bloomberg) -- Asda’s grocery sales dropped 4% in the last quarter, with market-wide data showing the highly leveraged UK supermarket chain losing ground to rivals.

The market share of Britain’s third-largest grocer, which is now controlled by London-based TDR Capital, fell to 12.8% in the 12 weeks ended June 9, down from 13.7% the year earlier, according to data published Tuesday by Kantar.

The research firm has reported declining Asda sales for three straight months, on a rolling 12-week basis.

TDR acquired billionaire Zuber Issa’s stake in Asda earlier this month, bringing its ownership to 67.5%. Mohsin Issa, Zuber’s brother, retains a 22.5% stake in Asda. Walmart Inc. owns the remaining 10%.

Asda has been weighed down by debt. Higher interest rates have pushed up its servicing costs and squeezed profits, leaving room for larger rivals Tesco and Sainsbury’s to gain market share. The growth of discounters such as Lidl is also posing a threat.

“Asda has been shedding market share for a while now,” said Clive Black, head of consumer research at Shore Capital. “The market is competitive, but at the end of the day you have to say in retail the buck stops with management.” 

Leeds-based Asda has been caught off guard by the speed in which the industry has changed over the last year with respect to loyalty, according to Richard Lim, chief executive officer at Retail Economics.

“Tesco has really doubled down on membership pricing and that disrupted the industry,” he added.

A spokesperson for Asda said the business remains focused on its strategy of investing for growth, and giving customers “the opportunity to shop with us in more formats in more communities.”

Across the sector, take-home grocery sales rose at the slowest rate in two years amid bad weather and cooling inflation, Kantar said.

Overall food price inflation in the UK now stands at 2.1%, marking the sixteenth consecutive month that it has fallen. Supermarkets have been offering discounts and rewards to frequent shoppers in a bid to retain market share.

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