Asda claimed yesterday it was seeing signs of a recovery after the rate of its sales decline eased in its first quarter, helped by its price-cutting drive and improvements in product availability.
The group’s like-for-like sales over the four months to 30 April, adjusted to include the Easter trading period, declined by 3.1% – an improvement on the 4.2% fall in the previous quarter. Asda noted that it had seen further improvements in its performance in May.
As part of Chairman Allan Leighton’s recovery plan, the retailer has already cut the price of over 10,000 products, more than a third of its range. It claimed yesterday that the move to a new low ‘Asda Price’ was driving a 3% – 6% price gap over its traditional full-service rivals.
Back in March, Leighton said Asda was willing to take a significant hit to its profits to make itself 5% to 10% cheaper than its main rivals to help it win back shoppers. His comment hit the share prices of Tesco and Sainsbury’s on fears of a renewed price war at a time when the sector is already facing significant cost pressures.
“Although we are seeing the green shoots in sales performance, there is a long way to go,” Leighton said on Thursday.
Asda has also been working to improve its stores and customer service levels. It was revealed yesterday that product availability had increased from 90% to 95% since January, while customer satisfaction had also improved.
“People who’ve been in the industry a long time are amazed at the progress that we’ve made on availability in a relatively short period of time,” Leighton said
The update comes as Asda continues to cede market share to rivals, with data released by Kantar this week showing its share has fallen to 12.1% versus 13% a year ago.
Leighton was unfazed by this development, saying: “For me, market share is about tomorrow,” noting that Asda had also recorded its best sales performance since May 2024. “We’re not fixed on market share; we’re fixed on rebuilding the business. I’m not bothered about it at all,” he said.
Meanwhile, Leighton said he was not worried about the impact of rising food inflation on Asda’s ability to lower prices, saying it might actually be beneficial for the retailer. “We like it. If we’re putting prices down, when inflation is going up, this is good for us,” he said.
Asda yesterday highlighted other areas of improvement. Its George clothing offer saw like-for-like sales increase by 3.5%, outperforming the fashion market by 2% on volume.
Meanwhile, its Asda Express convenience chain also performed strongly. Like-for-like sales grew by 6.0% following the integration of all 469 stores and fuel sites acquired from Co-op and EG Group. The retailer noted that it also has a strong pipeline of new Express stores set to open in residential and city centre locations later this year.
Michael Gleeson, Asda’s Chief Financial Officer, concluded: “We have a clear strategy which we are executing against, backed up by a robust financial plan and a material programme of investment in price, range and availability. This has established a price advantage over other full-service supermarkets and we are beginning to see customers respond positively.
“Our consistent and disciplined approach to cash management and strong balance sheet, gives us the headroom to continue investing in lower prices for customers.”
Commenting on the results, Eleanor Simpson-Gould, a retail analyst at GlobalData, stated that Asda’s performance in the first quarter was “particularly alarming, given that the grocery market grew 1.4% in the first months of 2025”.
She added: “While the grocer commends improved product availability and independent price comparison reviews, the finish line for Asda’s recovery remains distant.”
Eleanor Simpson-Gould praised the group’s non-food success but noted that this cannot offset the urgent need for Asda to revitalise its food strategy. “If Asda fails to address its core brand identity issues, it risks becoming increasingly irrelevant in a rapidly changing UK grocery market,” she said.
NAM Implications:
- Asda is patently ‘cutting to grow’, in a price-sensitive market.
- All they need is time…
- (and owner’s patience)
- …as they extend Rollback to achieve a 3% – 6% price gap vs full-service rivals.
- Meanwhile, the product availability increase from 90% to 95% since January…
- …and improved customer satisfaction has to help…
- …but the issue keeps coming back to time.
- Fingers crossed, UK retail needs Asda…
