Asda saw robust sales growth in its second quarter period, driven by food inflation and strong demand for its own-label ranges as consumers sought cheaper alternatives to brands amid the cost-of-living crisis.
Over the three months to 30 June, the UK’s third-biggest grocery retailer saw its like-for-like sales jump 9.6% – an increase of 1.8% on the previous quarter.
Asda stated that a combination of low prices and improved quality helped to drive a 14.7% increase in own-label sales. Its budget ‘Just Essentials’ range, which was launched last year, performed particularly well, with sales up 87%. The retailer pointed to data showing it was now the leading value range in the market with a 20.2% share.
Asda highlighted that its focus on value initiatives, such as price lock campaigns and discounts in its cafes, had proved popular with customers. It also revealed that more than 5 million customers were now regularly using its Rewards loyalty app, benefitting from returns of over £200m.
Meanwhile, the retailer claimed that its clothing and general merchandise business had outperformed the wider market during the quarter, with like-for-like sales growth of 2.8% and 6.3% respectively.
In online grocery, Asda stated that it had continued to perform strongly, delivering an average of 800k orders per week across the quarter and maintaining its position as the UK’s second-largest online supermarket.
“The growth in like-for-like sales across the quarter reflects the strength of our customer proposition,” said Michael Gleeson, Asda’s Chief Financial Officer.
“Our focus on providing great quality and affordable food, stylish clothing and homewares from George, and the ability to shop when and how they like, is clearly resonating with our customers.”
He noted that the business was continuing to see inflation headwinds in its cost base but was passing on reductions in commodity prices – such as wheat and milk – to its customers, particularly in its own-label ranges.
Asda also revealed that it was pushing ahead with the integration of 119 convenience stores it acquired from the Co-op last year. It also expects to complete its £2.27bn acquisition of EG Group’s UK and Irish petrol station estate in the fourth quarter.
NAM Implications:
- Given the own-label and food-to-go initiatives, Asda appears to be trying (successfully)…
- …to build up momentum before the debt burden hits.
- This could work, if time allows.
- (Witness Amazon)
- In which case, best be aboard…
