Asda has reported like-for-like sales excluding petrol up 1.3% in its third quarter, reversing the declining sales trend it suffered earlier in the year.

In the period to September 30, the grocer said profits for period “grew ahead of sales, beating internal targets”.

The figures will provide some respite for the grocer. Asda had been lagging the market since the start of the year, and in its second quarter reported like-for-like sales fell 0.4%.

In its third quarter, Asda relaunched its mid-tier brand Chosen By You, bolstered activity around Asda Price Guarantee leading to “a four-fold increase in weekly comparisons”, and said it recorded sales via “continuing to grow at 30%”. It said it also lowered the price of core items including milk.

Andy Clarke, Asda chief executive said: “After a particularly tough start to the year we’re pleased with the progress we’re making. The new initiatives we have put in place - Asda Price Guarantee, Chosen By You launch, Extra Special revamp, plus George firing on all cylinders - are all increasing the number of customers coming through our doors.

“As we approach Christmas we are in good shape and are clearly focused on delivering for our customers in three key ways - keeping our prices low, enhancing our quality and driving product innovation into our stores through the introduction of new ranges.”

Asda has also introduced some new products into its top-tier Extra Special range for Christmas including sherry trifle gateaux, trout and mini steak and ale pies. During October it also ran a 25% off offer on Extra Special.

Clarke said: “I’m pleased to say the Extra Special event was a huge success, and drove incremental sales. Our premium range is in good shape and customers are responding well to the new products we’ve introduced this year.”

The latest Asda Income Tracker revealed the typical family’s disposable income was £4 lower in September 2010 than September 2009. As a result Asda has seen shoppers stock up on toys and chocolates earlier in the year to spread the cost.

Doug McMillon, President and CEO of Walmart International said: “We are encouraged by the recent sales momentum in the UK where we are well positioned for the holiday season.  At a time where economists are forecasting very tough economic conditions, Asda remains committed to saving customers money every day.”

During the third quarter Asda opened two new stores in Hazel Grove and Gorseinon. Since then it has opened a further five in Workington, Twickenham, Kettering, Langley Mill, and Hastings. Its final new store in 2010 opens in Newquay next Monday November 22.

Earlier today Asda announced it was set to create 7,500 new jobs in 2011.