LONDON, Aug 8 (Reuters) - Asda, Britain's third biggest

supermarket group, posted a 5.3% decline in underlying sales in

the three months to the end of June on Thursday, as it continues

to underperform its rivals.

The group, which is majority owned by Mohsin Issa and

private equity firm TDR Capital, said total revenues excluding

fuel fell by 2.2% to 5.3 billion pounds ($6.74 billion).

Asda is struggling to keep up with industry leader Tesco ( TSCDF )

and No. 2 Sainsbury's ( JSNSF ), which analysts have

blamed on Asda's ability to compete being hampered by its high

debt levels.

Asda said on Thursday its net debt at the end of June was

3.9 billion pounds and it remained committed to further

de-leveraging.

It said it would invest in core grocery lines, improving

efficiencies, adding more staff hours to ensure shelves were

replenished faster, and growing its customer loyalty programme

to drive a return to growth.

($1 = 0.7866 pounds)