Asda insists trading has improved after fresh sales fall

Asda's torrid year has continued under new boss Sean Clarke, with the supermarket giant yesterday reporting another hefty fall in sales amid chronic competition in the food retailing industry.

Asda said efforts to turn its sales performance around were starting to pay off. Picture: Rob McDougall

The group, which is Scotland’s second-largest supermarket business, said underlying sales fell 5.8 per cent in the three months to September – its ninth successive quarterly sales decline.

The latest knockback was a slight improvement on the 7.5 per cent slide in like-for-like sales in the three months to June, with Clarke taking over from predecessor Andy Clarke as chief executive on 11 July.

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Asda, which is owned by US retail giant Wal-Mart, has seen its market share slip one full percentage point to 15.5 per cent over the past year, partly due to the continued incursions of German discounters, Aldi and Lidl.

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Clarke – who formerly headed Wal-Mart’s business in China – sought the positives in the latest performance, commenting: “We have lowered thousands of prices, improved hundreds of own-brand products and invested in more hours for colleagues on the shop floor, so it’s encouraging to see more customers shopping with us in stores and online.”

Wal-Mart chief financial officer Brett Biggs said: “The key priority remains driving an improved customer experience and building sales momentum by simplifying the offer, improving product availability and making strategic investments in service and price.”

Asda said in September that it was cutting prices on thousands of everyday items by an average 15 per cent as part of a campaign that has also seen the chain improve the quality of its own-brand ranges.

Many analysts were sceptical, however. Patrick O’Brien, analyst at retail consultancy Verdict Retail, said: “Asda’s positioning has plunged into crisis. The discounters have undermined its low price stance, but it is unable to position its brand or customer experience as offering more than the discounters, in the way that its Big Four rivals have been able to do.”

Asda is the UK’s third-biggest supermarket, behind Tesco and Sainsbury’s, with Morrisons in fourth place.

O’Brien added: “The others never traded on being the cheapest, but Asda did, and now it isn’t, so unless Wal‑Mart wants to use its financial muscle to take the price war to a new level, it must demonstrate new reasons for shoppers to go there.”

Phil Dorrell, partner at Retail remedy retail consultants, said: “Sales performance behind competitors and slumping market share are no way to head into the golden Christmas quarter.”

Wal‑Mart also disappointed investors with its latest sales performance. The world’s largest retailer said like-for-like sales excluding fuel at its US stores rose by a slightly lower than expected 1.2 per cent for the three months to October. Profits fell to $3.03 billion, from $3.3bn a year ago.