Asda has 'more to do' to reach goal of non-food number 1

ASDA, the UK's second-biggest supermarket chain, has admitted it has "more work to do" after tough recent trading, and said it aims to overtake arch rival Tesco to become the country's biggest non-food retailer within five years.

In a presentation to analysts yesterday, chief executive Andy Bond said the US-owned group had been performing "below our high standards" with "more work to do to sharpen up in store".

Asda's year-on-year sales growth of 2.7 per cent in March was ahead of the market but behind "big four" rivals Tesco, Sainsbury's and Morrisons, Bond said.

Easing food inflation has depressed sales growth, while consumer confidence is "fragile" and the cost of living the "primary concern", Asda said.

The chain, which is owned by US retailing behemoth Wal-Mart, currently has 374 stores and more than 18 million UK customers.

It wants to build up its position to become the clear market number two in food and the leader in non-food sales over the next five years – opening 100 more supermarkets and 150 Asda "Living" general merchandise stores.

The group's plans for rapid growth in non-food has fuelled speculation of a major acquisition, with recent reports suggesting Asda could make a bid for Argos and Homebase owner Home Retail Group.

Asda has meanwhile launched the search for a new chief executive after announcing that Bond is to move to a part-time role as chairman. It hopes to hire a new boss soon, but said Bond would remain as chief executive until a successor was appointed. Bond has led Asda for the past five years and has notched up a 16-year career with the firm.

Wal-Mart chief financial officer Tom Schoewe denied that Bond's move was linked to Asda's under-performance.