"We're not being distracted by gimmicks happening around the market," Andy Clarke, chief executive of the British arm of United States retailer Wal-Mart (>> Wal-Mart Stores, Inc.), told reporters on Thursday.

"Vouchering is unsustainable in our view," he said.

Britain's supermarkets, despite their focus on essential goods, have not been immune to the economic downturn and are battling intensely for market share.

Between mid-March and mid-April, market leader Tesco (>> Tesco PLC) offered customers who spent 20 pounds a 5-pound ($7.61) voucher to spend on a shop of 40 pounds or more, while No. 4 player Wm Morrison (>> Wm. Morrison Supermarkets plc) recently launched a "Payday Bonus", giving customers a 10-pound voucher if they do four shops over 35 pounds.

"That's pretty heavy investment," said Richard Mayfield, Asda's chief financial officer.

"What we're focused on is more sustainable investment in long-term prices," he said.

Asda said sales at shops open over a year, excluding fuel and VAT sales tax, rose 1.3 percent in the 14 weeks to April 12 - a significant improvement on a 0.1 percent increase in the fourth quarter of the previous financial year.

"We had a pretty tough April precisely because of the level of vouchering activity. Since that's finished, our sales are looking pretty strong again," said Mayfield, referring to second-quarter trading so far.

Asda, which has been investing more in 50-pence and one-pound lines and lowering prices on essentials such as milk, eggs and bread, said online sales grew by more than 16 percent in the first quarter. The firm's market share remained unchanged at 17.9 percent.

On Wednesday, the Bank of England nudged up its outlook for growth and inflation.

However, Clarke said: "The message from families and the general public is it's still pretty tough".

Last month Tesco posted a 51.5 percent slump in year profit, while last Thursday Morrisons posted a 1.8 percent fall in first-quarter like-for-like sales.

However, last Wednesday No. 3 grocer J Sainsbury (>> J Sainsbury plc) reported a 6.2 percent rise in annual profits.

Asda's sales update was released as parent Wal-Mart, the world's largest retailer, posted a higher quarterly profit on Thursday, even as underlying sales fell 1.4 percent.

(Editing by Rhys Jones)

By James Davey and Neil Maidment