LONDON, May 17 (Reuters) - Asda, Britain's third largest

supermarket group, said on Friday its underlying sales rose 1.4%

in the first quarter - a slowdown from growth of 2.2% in the

previous quarter and an underperformance versus its bigger

rivals.

The grocer, owned by brothers Zuber and Mohsin Issa and

private equity group TDR Capital, said total revenue, excluding

fuel, rose 6.6% to 5.3 billion pounds ($6.7 billion) in the

three months to March 31.

Monthly industry data has consistently shown Asda

underperform its main rivals - industry leader Tesco ( TSCDF )

and No. 2 Sainsbury's ( JSNSF ).

According to data from market researcher Kantar, Asda's

sales fell 0.4% over the 12 weeks to April 14, with its market

share falling 60 basis points year-on-year to 13.4%.

Nevertheless, Mohsin Issa said Asda "made good progress

against its strategy in the quarter, laying the foundations for

long-term success."

He pointed to the completion of the conversion of 470

convenience sites acquired from the Co-op and EG UK to Asda

Express, increasing its total store estate to over 1,200 sites.

In January, Asda started matching the prices of discounters

Aldi and Lidl on hundreds of comparable grocery products.

"We're confident we're doing the right things for the long

term," chief financial officer Michael Gleeson told reporters.

Asda has been burdened by high debt levels since the Issas

and TDR bought the business from Walmart ( WMT ) in a 6.8

billion pound deal in 2020 which left the U.S. giant retaining a

10% stake. Asda's interest costs in 2023 were 225 million

pounds.

Earlier this month, Asda refinanced over 3.2 billion pounds

of debt.

Asda has been without a CEO since Roger Burnley left

abruptly in 2021. Gleeson said the search was ongoing with

headhunters appointed.

He declined to comment on media reports that Zuber Issa was

looking to offload his 22.5% stake.

($1 = 0.7905 pounds)