Asda’s sales fell during its first full quarter under new ownership after facing tough comparatives with the pandemic-driven surge in demand for groceries last year.
Over the period to 30 June, the group’s like-for-like sales declined by 0.7% as people shopped less in supermarkets following the reopening of the non-essential retail and hospitality sectors.
However, Asda highlighted that its sales on a two-year basis were still up 3.1% as customers continued to spend more on consuming meals at home compared with pre-pandemic levels. The lockdown trend of people trading up to premium products also continued during the quarter, with a 23% increase in like-for-like sales of Asda’s premium Extra Special range compared to 2019.
Like other supermarket groups, Asda confirmed that demand for online groceries was easing as customers returned to stores. However, the channel now accounts for 17% of the chain’s total food sales compared with only 10% in the same quarter in 2019.
Meanwhile, Asda revealed that both its Chief Operating Officer Anthony Hemmerdinger and Chief Strategy Officer Preyash Thakrar have left the business with immediate effect.
Hemmerdinger had been seen as a leading internal candidate to succeed Roger Burnley, the group’s previous Chief Executive who abruptly stepped down last month despite initially indicating he would remain in post for a year after the Issa brothers and TDR Capital completed their takeover.
Reports have suggested that Mohsin Issa in particular has been taking a more active role in the day-to-day running of Asda since the competition regulator cleared the £6.8bn deal in June. The abrupt exits of Hemmerdinger and Thakrar will see retail vice presidents Jodie Tate, Simon Gregg and Kevin McBride report directly to him on an interim basis.
Asda is still searching for a new chief executive with the company saying on Friday that it looked forward to “making an announcement in due course”. The group has made several high-profile hires in recent months. These include KFC’s Meg Farren as Chief Customer Officer and Sam Dickson from Waitrose as VP of Own Brand. Carl Dawson from M&S also joined as Chief Information Officer.
In a joint statement, Issa brothers said: “The Asda business has proved incredibly resilient in 2021, as customers continue to eat more at home and enjoy food which is both fantastic quality and great value.”
They added: “We continue to see significant opportunities to drive innovation across the business and we look forward to working with the Asda team to execute our growth strategy.”
Asda announced on Friday that it planned to open nearly 230 convenience stores at petrol stations operated by its new owners.
NAM Implications:
- Following any takeover, especially give uncertainty re the level of involvement of new owners…
- …the senior team will consider their options, inevitably..
- And the resulting shakeout will continue…
- …until a new dynamic equilibrium is reached.
- Meanwhile, NAMs revert to short-term to minimise wasted effort.
