Asda has revealed its first set of annual results since being acquired by the Issa brothers and TDR Capital, with the business saying it was making progress towards its target of regaining its status as the UK’s second-largest grocery retailer.
Over the year ending 31 December 2021, the group’s total sales edged up 0.5% to £20.4bn with like-for-like growth of 0.6%. The rise in sales was said to have been driven by robust performance of home and outdoor products and a return to growth in clothing after pandemic-related disruption in 2020. Grocery like-for-like sales decreased by 0.5% in 2021 as people returned to eating out when Covid-related restrictions eased, although they were up 4.6% on a two-year basis.
Asda had a disappointing final quarter covering the key Christmas period, with like-for-like sales down 2.9% against tough comparatives with the same quarter in 2020 when national lockdowns returned. However, Tesco recorded a 0.2% rise over a similar period.
Asda’s operating profit in 2021 jumped 42% to £693.1m due to a reduction in Covid-related costs compared with the previous year.
The retailer highlighted that it had continued to invest in its strategy to “provide customers with more convenient ways to shop and give them more exciting reasons to visit stores”.
The supermarket, in partnership with the EG Group, opened 31 Asda On the Move convenience stores last year as part of a wider roll-out. Asda also introduced EG foodservice brands such as LEON, Cinnabon and Sbarro in 17 stores and aims to increase this figure to 100 locations by the end of this year.
In addition to developing new channels, Asda stated that it remains a priority to improve the shopping experience in its existing stores and help customers fulfil multiple shopping missions when they visit. Over the last 18 months, Asda has worked with more than 40 different brands and has more than 1,000 partnership propositions across 400 of its stores. The group stated that its focus for this year was to roll out the most successful partnerships which are ready to scale.
Asda has also been investing in enhancing its fresh produce proposition with £10m spent on improving the product, packaging and customer experience in this department. The investment has included the appointment of 250 specialist Green Grocers in its stores with Asda claiming that the changes have been positively received by customers and the business is currently trading ahead of the market in fresh produce.
“When we bought Asda we were clear that we wanted to grow this great business and our ambition is for Asda to regain its position as the UK’s second-largest grocery retailer,” said Mohsin Issa, Asda’s co-owner.
“We are pleased with the progress made in the six months since we officially took over the business and are confident we can achieve this long-term ambition by providing customers with exceptional value wherever and however they choose to shop with us.”
NAM Implications:
- In case it has escaped anyone’s notice, Asda has been all systems go in the six months since the Issa brothers took over…
- …and on balance, the moves are beginning to pay off.
- Time to reconsider your position if not already on board…
- …an operation unlikely to slow down.
- Unless distracted by debt…
