Belfast Telegraph

Asda sales edge up 0.5% as its merger with Sainsbury's awaits approval

By Helen Cahill

Asda sacrificed its profits for a tentative turnaround in sales last year as it struggled to hold on to its market share ahead of a mega-merger with Sainsbury's.

The supermarket, which has 17 stores here, saw sales edge up 0.5% on a like-for-like basis in 2017, compared with a 5.7% drop in 2016.

But operating profit slumped 13% to £735.4m, which Asda said was due to a decision to cut prices.

However, the retailer's market share fell 0.3% to 15.4%.

Asda chief executive Roger Burnley said: "During the year momentum returned, driven by a series of planned investments in lowering price, further improving quality and innovation in our own brand ranges and providing an even better shopping experience whether in store or online.

"Our customers have responded well to this strategy and the momentum of 2017 has continued into the first quarter of 2018."

In the company's strategic report, Asda's finance chief Alex Russo said the business was facing a tough time.

"The consumer environment continues to be challenging, with discretionary income marginally decreasing during the year," Mr Russo said.

"Customers remain cautious in their spending habits and we expect conditions to remain tough for our customers, with price being a key consideration."

Over the year the Walmart-owned retailer opened three superstores, five supermarkets and a centre for servicing online deliveries.

In April Asda announced plans to open its 18th store in Northern Ireland.

It is planning to create 250 jobs with a 40,000sq ft site at Doagh Road in Mallusk.

The location is the former site of collapsed telecoms giant Nortel, which ceased operations in 2010. It remains on course to merge with Sainsbury's in a £12bn deal which will allow it to further invest in lower prices, although the tie-up still requires regulatory approval.

Sainsbury's boss Mike Coupe has said the merger will produce £500m in cost savings.

Consumers have been promised cheaper everyday items, although it is not yet known where the price cuts will fall.

The Competition and Markets Authority is scrutinising the deal and it is expected that scores of stores will have to be offloaded as part of the competition review. Asda has also been axing jobs in the UK, announcing in January that 28 roles will go at its head office on top of 300 job losses revealed in September as part of a major cost-cutting drive.

It's been claimed that a Sainsbury's and Asda tie-up will enable them to increase their Northern Ireland customer base "considerably".

The latest market research by Kantar Worldpanel says Tesco is the number one grocer here, with a market share of 35.2%. Sainsbury's was behind Tesco with a share of 17.3%, with Asda in third place on 17.1%.

Lidl claimed the fastest growth, with sales up 5.7%.

Belfast Telegraph

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