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Challenge for new Asda boss as supermarket posts worst quarterly sales plunge

Published 18/08/2016

New Asda boss Sean Clarke is attempting to turn Asda around through a £1.5 billion investment in price cuts amid a brutal price war in the supermarket sector
New Asda boss Sean Clarke is attempting to turn Asda around through a £1.5 billion investment in price cuts amid a brutal price war in the supermarket sector

Struggling supermarket Asda has laid bare the challenge awaiting new boss Sean Clarke after reporting its worst quarterly performance on record.

The chain - owned by US giant Walmart - posted a 7.5% fall in like-for-like sales in the second quarter.

The results represent the eighth consecutive quarter of sliding sales and a worsening of the 5.7% drop seen in the previous period.

Mr Clarke, who took up the reins on July 11 after being parachuted in to replace previous boss Andy Clarke, is attempting to turn Asda around amid a brutal price war in the supermarket sector.

Mr Clarke said he is "getting under the skin of the business", adding: "Although Asda is in midst of a very challenging period, there is no doubt in my mind that the culture that has always been at the heart of our success is still there.

"We've also started one of the biggest journeys of reinvention in our history to further build on our strong offer and I feel positive about the future."

Dubbed Project Renewal, the plan to revive Asda's fortunes involves reduced prices through a previously announced £1.5 billion investment, job cuts and improved ranges.

Walmart boss Doug McMillon said he is addressing Asda's decline in sales with "urgency".

He added: "In the UK the competitive environment and food deflation continued to challenge the market, significantly impacting traffic and comp(arable) sales.

"Our strategy to turn things around is focused on improving the retail basics. We are simplifying and strengthening our offering through improved availability and assortment discipline, reducing costs and driving sales through strategic price investments."

Mr Clarke, who has also held top roles with Walmart in Japan and Canada, will find himself up against a resurgent Tesco and Morrisons, which are both undergoing their own turnarounds.

German discount duo Aldi and Lidl are also continuing to gain market share at the expense of the so-called big four supermarkets - Tesco, Asda, Morrisons and Sainsbury's.

Walmart's chief financial officer, Brett Biggs, said: "In the UK, fierce competition and food deflation continue to challenge the market, significantly impacting traffic and comp sales trends.

"Our strategy remains focused on improving retail basics - simplifying and strengthening the offer through improved availability and assortment discipline, reducing costs through our cost analytics programme and driving sales through strategic price investments where we remain committed to the previously announced five-year £1.5 billion price investment."

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