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Poor UK results could threaten plans for Asda superstores in Northern Ireland

Company suffers biggest sales drop on record

By John Mulgrew

Published 19/02/2016

Andy Clarke, CEO of Asda, faces a challenging time
Andy Clarke, CEO of Asda, faces a challenging time

Asda has suffered its biggest UK sales drop on record, despite the supermarket giant growing its market share in Northern Ireland.

It has seen sales across the UK slump nearly 6% over the crucial Christmas and New Year period.

And it's understood the retailer could be shelving plans for some of its bigger superstores in Northern Ireland.

Just last month the Belfast Telegraph revealed it looks set to pull the plug on plans for a £25m store in Newtownabbey, earmarked to create up to 300 new jobs.

But sales in Northern Ireland are on the up.

Asda was the only major player to see an increase in its market share last month, from 17.2% to 17.5%.

Asda, which is owned by US retail giant Walmart, said the latest falls across the UK came as it faced "fierce" competition in the grocery sector, which had put its market share "under pressure".

The announcement came as the supermarket put further flesh on the bones of its turnaround strategy after revealing plans to invest £500m into cutting prices last month.

Asda announced in January that it would cut hundreds of jobs across the UK in its latest move to strengthen its competitive position.

Donald McFetridge, retail analyst with the Ulster University, said it's no surprise that Asda is suffering throughout the UK.

"It doesn't really surprise me to learn that Asda has just reported extremely disappointing sales figures for the period, which includes Christmas 2015 trading," he said.

"Even after 10 very successful years of trading in Northern Ireland, with a portfolio which now includes 17 stores, Asda has publicly admitted that the supermarket sector here is still a very challenging place in which to do business."

Speaking to the Belfast Telegraph last month, Asda chief executive Andy Clarke wouldn't confirm whether it was pulling plans for development here.

"Where there is space available to build a new spot, and it's right for us and the community, we want to open space," Mr Clarke said.

"The challenge in the last five years is that commercial sites have been less viable."

Mr McFetridge said: "It would certainly not shock me if we were to have some future store plans shelved in Northern Ireland".

"I expect it will also be the case in several other geographic regions," he said.

"At the present time, the supermarket world is cut-throat, with the Big Four jostling for pole position in a market where the German discounters are constantly snapping at their heels by extending product ranges and trading-up, as evidenced in the wheel of retailing.

"Price is still a very sharp instrument, in spite of increasing consumer confidence and advances in spending power, but Asda needs to use a much sharper knife than that used by its competitors."

Shore Capital analyst Clive Black said Asda needs a more "robust and consistent proposition" than just cutting prices.

"If any of the superstore groups needs to be fighting the fight against 'limited assortment discounters' then it has to be Asda, not least because it appears to be the current chief victim of their advance."

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