Sales At Asda Continue To Fall But Progress Being Made

Asda has reported its 11th consecutive quarter of falling underlying sales, although its management insists the chain’s recovery is on track.

In the three months to 31 March, like-for-like sales at the UK’s third biggest grocery retailer fell 2.8% (total sales +0.9%). This compares to a 2.9% decline in the fourth quarter of last year and 5.8% fall the period before that, suggesting the turnaround efforts of its new management team are having some effect.

However, the chain’s Chief Executive Sean Clarke stressed more needed to be done to accelerate the recovery. He said: “We’re pleased that the momentum of Q4 has continued into the New Year with a third consecutive quarter of improvement. Despite this progress we are in no way complacent and there is still much for us to do.”

Clarke pointed to improvements for its customers in areas such as fresh food, service and availability – both in its stores and online. He added that demand for its improved own label ranges had increased.

Meanwhile, Walmart’s Chief Financial Officer Brett Biggs said when normalising for the effects of the leap year in 2016 and a later Easter in 2017, Asda was showing sequential improvement in the underlying business, including customer traffic and basket sizes. “We’re confident we’re on the right track,” he said.

Recent data released by Kantar Worldpanel showed that Asda had seen its year-on-year sales rise for the first time since October 2014 during the 12 weeks to 23 April 2017, edging up 0.8%. The chain is said to have benefitted for a quarter of a million extra shoppers during the period and a strong performance online.  However, its sales growth still lagged behind its main rivals and its overall market share fell by 0.4 percentage points to 15.6%.

NAM Implications:
  • Turning a corner, but is it fast enough for Walmart?
  • A key internal issue for Walmart has to be the diluting effect of Asda on global profits performance.
  • An opportunity for global brand NAMs to shine via enhancing Asda performance, because of Walmart focus on the UK.
  • Meanwhile, local NAMs that can provide accelerated growth have to appeal to Asda.