Entertainment UK (EUK), the entertainment wholesale subsidiary of British retailer Woolworths Group plc, has struck an agreement in principle to supply entertainment products to the Asda supermarket chain.

Through the deal, unveiled today, EUK will supply Walmart-affiliated Asda with CDs, video games, and selected elements of its DVD range.

Supply is expected to commence on a phased basis from August 2007, for a term of no less than two years, Woolworths explained in a statement issued today to the London Stock Exchange.

"On a full year basis, it is anticipated that this will add approximately £200 million ($398 million) to EUK's turnover," the company said.

"We are delighted to have won the Asda business," comments Trevor Bish-Jones, Woolworths Group plc's chief executive. "It marks another important step in the development of EUK. Over the past 18 months, through a series of contract wins and acquisitions, we have significantly improved the underlying quality of the EUK business," he added.

Earlier this week, Asda ceased selling CD singles in its U.K. outlets. In 2005, the most recent period for which sales data is available, Asda counted 288 outlets which sold records, according to the BPI Statistical Handbook. During that time, the chain had an 11.9% share of the singles market in Britain in unit terms, and 11.8% in expenditure. Asda grabbed an 8.5% share of units and 8.4% share of the albums market in 2005.