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Asda sees sales fall again but says trading has improved

Published 17/11/2016

Asda reported a 5.8% fall in like-for-likes sales, excluding petrol, in its third quarter
Asda reported a 5.8% fall in like-for-likes sales, excluding petrol, in its third quarter

Supermarket Asda has posted another hefty fall in sales, but said trading had improved as price cuts and turnaround efforts start to pay off.

The chain - owned by US giant Walmart - reported a 5.8% fall in like-for-likes sales, excluding petrol, in its third quarter to September 30.

This comes against a dire previous three months, when the group reported a 7.5% sales plunge in its worst quarterly performance on record.

New boss Sean Clarke, who took up the reins on July 11 after being parachuted in to replace previous boss Andy Clarke, has slashed the prices of everyday items as he attempts to arrest falling sales at the group.

He said: "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."

Asda announced in September that it was lowering thousands of prices on every day favourites by an average of 15%, with items such as beef, chicken and sausages all becoming cheaper.

The move, part of a new value campaign dubbed That's Better, has also seen Asda improve the quality of its own-brand ranges.

The turnaround comes as Asda fights back having lost out recently in a brutal price war across the sector.

Walmart 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, Tesco, Morrisons and Sainsbury's are attempting to fend off the challenge from German discounters Aldi and Lidl, which have taken market share from the so-called Big Four.

Trading woes have been compounded recently by the plunge in the value of the pound since the Brexit vote, which is putting pressure on suppliers to raise prices to cover increasing costs.

Tesco recently engaged in a high-profile spat after Unilever demanded an across-the-board price hike - reportedly up to 10% - for popular brands such as Marmite.

It halted deliveries to Tesco until the stand-off was resolved.

Recent supermarket share figures confirmed Asda making strides in its recovery.

Kantar Worldpanel said Asda's sales dropped 5.2% in the latest quarter - the slowest decline for four months.

Sales of its premium own-label range increased 8%, according to Kantar, although its market share declined by one percentage point to 15.6%.

But it is being outpaced by Big Four rivals, with Tesco increasing its market share for the first time in five years after Kantar said its sales rose by 1.3%.

Morrisons also recently saw like-for-like sales growth in the third quarter - up 1.6% thanks to a boost from Halloween.

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