Sales performance at Asda continued to improve during the first quarter of this year as it began its separation from its former parent Walmart. The supermarket group has also posted its full accounts for last year, which showed it had made dividend payments worth nearly £3bn to the US retail giant amid falling profits.
Over the 13 weeks to 31 March, Asda’s like-for-like sales (excl. fuel) rose by 7.3% as it benefitted from increased demand for food in supermarkets during the third national lockdown and strong non-food sales when other shops were closed. This compares to an increase of 5.1% in the previous quarter and a 2.7% rise in the period before that.
Asda revealed that like-for-like food sales had risen by 3.9% in the first quarter as its customers stocked up on core grocery lines and household staples. Online shopping remained popular, with the group’s total digital sales (Asda.com and George.com) up 88% year-on-year.
However, non-food categories were the star performer. Like-for-like clothing sales jumped 31% and general merchandise sales climbed 39%, driven by demand for outdoor furniture, BBQs, and garden accessories.
Asda’s Chief Executive, Roger Burnley, said: “We showed huge resilience last year in unprecedented circumstances and carried this momentum through the first quarter with strong like for like sales growth in many key categories, especially clothing and general merchandise.
“Whilst the closure of non-essential retail during the first quarter helped stimulate demand, our constant focus on keeping prices low, providing great quality products and developing in-store partnerships with market-leading consumer brands such as B&Q, The Entertainer and Greggs, continues to resonate with customers.”
Burnley highlighted that Asda customers are now feeling much more optimistic about the future, noting almost 60% of those it recently surveyed said they are looking forward to a summer of socialising.
Asda also filed its Statutory Accounts at Companies House yesterday, covering the year to 31 December 2020. These showed that Asda’s turnover had risen 3.6% to £20.31bn after an increase in grocery sales offset falls in clothing and general merchandise. Like-for-like sales (excl. fuel) over the year increased by 3.5%.
However, operating profit fell by 16.7% to £486.5m. Asda said this was predominantly due to Covid-related expenses, including costs around shielding vulnerable staff and hiring extra workers to cover absences and cope with increased demand.
Meanwhile, the annual accounts showed that, as part of the terms of sale of Asda, dividend payments were made to Walmart during the year comprising of £1.65bn in cash and a dividend in specie – a payment satisfied through assets – of £1.27bn.
The Issa brothers and TDR completed the purchase of a majority holding in Asda in February in a deal worth £6.8bn. The transaction, which sees Walmart retain a minority stake, is still subject to final approval by the Competition and Markets Authority (CMA).
NAM Implications:
- Right product mix (food & non-essentials) at the right time…
- With a value positioning that reflects Lockdown mood.
- A good basis for growth under new owners…
