Sales slump at Asda after refusal to fight discounters

Asda's sales slumped nearly 6 per cent over the key festive period, six months after the supermarket major's boss claimed the low-point had been reached in the face of competition from the discounters.

Asda's sales fell almost 6% over the crucial festive season. Picture: Lisa Ferguson

The chain, which is owned by Wal-Mart of the US and has an 18 per cent market share in Scotland, yesterday revealed like-for-like sales fell 5.8 per cent in the fourth quarter of 2015, including Christmas. Annual like-for-like sales also slid 4.7 per cent.

December had seen “fierce” discounting in the food retailing sector, the supermarket giant said.

The latest performance will be seen as an embarrassment for Asda chief executive, Andy Clarke, who said last summer that he believed the group had reached its “nadir” when it unveiled a 4.7 per cent slide in same-floorspace sales in the second quarter of 2015.

The figures came as Asda started selling boxes of “wonky” vegetables in 29 of its stores across Scotland in a bid to cut the amount of discarded produce.

Clarke claimed yesterday that the company, which has about 60 branches north of the Border, had a “successful year” in terms of its financial strength that would make it a medium- to longer-term winner in the sector.

He said the final quarter of last year had been “incredibly challenging” and “softer than even we thought”, with ­deflation running at 2 per cent.

Clarke said he believed 2016 would be equally tough in the sector, where discounters Lidl and Aldi have made big inroads into the sales of the big four: Asda, Tesco, Sainsbury’s and Morrisons.

But he said Asda was sticking to its targets of being 10 per cent cheaper than its big three rivals and only 5 per cent more expensive than the discounters. Currently, the group is 8 per cent cheaper than its major rivals, and 11 per cent more expensive than the discounters.

Clarke said Asda would remain “in financial control” to sustain its business promotion and was targeting £250m savings in 2016.

He said the group had no regrets about not taking part in Black Friday promotions last year even if this had contributed to the December sales fall.

“We think the consumer is looking for a broader appeal than one day’s excitement,” Clarke added.

He added that he had “no crystal ball” to predict when like-for-like sales would turn positive.