Asda sees positive momentum despite fresh sales fall

Supermarket giant Asda has reported another slide in quarterly sales, but its US parent Walmart insisted that the company was heading in the right direction.

Asda revenues were down but the decline has slowed for the third quarter in a row. Picture: Contributed
Asda revenues were down but the decline has slowed for the third quarter in a row. Picture: Contributed

Asda, the second-largest food retailer in Scotland, saw same-floorspace sales fall 2.8 per cent in its first trading quarter.

That marked the 11th quarter running of like-for-like revenue declines, but City analysts noted it was a slight improvement on the previous three months, which saw the retailer’s sales fall by 2.9 per cent.

Sign up to our daily newsletter

Sean Clarke, Asda chief executive, said the group was pleased with increasing impetus, but that there remained a great deal to do to restore the its fortunes.

He said: “We’re pleased that the momentum of the fourth quarter has continued into the new year with a third consecutive quarter of improvement. We’re delivering more consistently for our customers, ­particularly in fresh food, service and availability, both in stores and online.”

But he added: “Despite this progress we are in no way complacent and there is still much for us to do.”

Clarke, who replaced Andy Clarke as boss last summer, has slashed the prices of everyday items as he attempts to arrest falling sales. Last August, Asda posted its worst ever sales fall of 7.5 per cent.

In response, it announced in September that it was lowering thousands of prices on ­everyday favourites by an average of 15 per cent, with items such as beef, chicken and sausages all becoming cheaper.

Like its big three rivals, Tesco, Sainsbury’s and Morrisons, the company has been fending off strong market share gains by the German discounters Lidl and and Aldi.

Clarke has launched a new value campaign, That’s Better, which has seen Asda improve the quality of its own-brand ranges.

In a trading update, Walmart said it is confident that Asda is “on the right track”.

Walmart chief executive Doug McMillon said: “We’ve made some progress in the UK and the team is executing their plan.

“We are navigating our way back to a position of strength in that highly competitive market. When normalising comp sales for the later Easter and Leap Day, we continued to see sequential improvement in the business, including customer traffic and ticket.”

Kantar retailing consultancy data out this month showed that Asda’s market share fell to 15.6 per cent in the quarter to 23 April, down from 16 per cent. However, Kantar also said that Asda’s sales rose 0.8 per cent, its first same-floorspace revenues increase since October 2014.

Brett Biggs, Walmart’s chief financial officer, told analysts: “When normalising for Leap Day last year and a later Easter this year, we continued to see sequential improvement in the underlying business, including customer traffic and ticket. We’re confident we’re on the right track.”

Clarke added: “Participation in our award winning Own Brand ranges has increased as we focus on increasing its value and quality and make sure we are offering the right ranges for our customers. We were pleased to receive industry recognition for these ranges and our online service in recent weeks.

“Our colleagues continue to make improvements for our customers and I want to thank them for their hard work.”