Asda’s Sales Continue To Fall But Showing Signs Of Improvement

Asda’s like-for-like sales fell again in its latest quarter, although the figure was a marked improvement on the chain’s dismal performance earlier in the year.

During the fourth quarter to 31 December covering the all-important Christmas trading period, Asda’s comparable sales declined 2.9% with net sales down 0.6%. This compared to a 5.8% fall the previous period and the 7.5% slide in the three months to June, suggesting the turnaround efforts of its new management team are starting to have some effect.

Doug McMillon, President and CEO of Asda’s parent company Walmart, commented: “In the UK, we faced some challenges this past year and we’re addressing this with urgency. I’m glad comp store sales improved during the fourth quarter, but we have a lot of work to do.”

The US group’s Chief Financial Officer, Brett Biggs, added: “We have a lot of work to do in this market, but we’re encouraged by some early signs of traction with improvements in the customer value proposition.”

Meanwhile, Asda’s Chief Executive Sean Clarke revealed the chain had gained more than 140,000 customers in the fourth quarter and stressed that shoppers were responding positively to recent changes in the business. He added: “We are putting customers first and have sharpened our prices, improved our ranges and availability, all with friendly service.”

Clarke was brought in to lead the business last July as part of an attempt to revive the supermarket’s fortunes. He was given a remit by Walmart to shift the balance of its trading strategy from protecting profit to protecting market share. Market commentators had expected Clarke to slash prices to restore sales growth. Instead he has focused on getting the basics right by overhauling stores, improving the product offering and customer service, alongside more on targeted price reductions. Analysts have said recently that there are signs of a recovery with stores being less cluttered and cleaner, with better product availability and customer service.

Earlier this month, Walmart revealed that it had started to provide more support to help Asda in its recovery efforts.   Scott Price, Chief Administrative Officer of Walmart International, told Reuters that the US giant will provide further firepower by ensuring Asda leverages the parent’s global purchasing muscle in everything from refrigerators to own label products to help drive down costs and therefore prices at the checkout.

NAM Implications:
  • How about a what-if on Walmart moving from lite to heavy touch?