Asda sets out its £600m expansion plans as price cuts weigh on sales
ASDA yesterday revealed plans to spend £600m on creating new stores and improving existing ones after the Wal-Mart-owned chain posted an accelerated decline in quarterly sales.
Britain’s second largest food retailer has been one of the most stable over the past two years and was the first to take action against the discounters in 2013 by launching a £1bn, five-year price-cutting plan.
However, fierce competition has taken its toll on the group and in the third quarter, like-for-like sales dropped by 1.6 per cent. Underlying sales over the 12 weeks to 4 January, Asda’s fourth quarter, fell by 2.6 per cent.
Chief executive Andy Clarke has been quick to criticise “short-term gimmicks” and heavy use of vouchering by its retail rivals.
“There’s no doubt that the fourth quarter drove a higher level of distress in the market with a significant amount of vouchering and promotional activity, I would say unsustainable medium-term activity,” he said.
Asda invested £300m in cutting prices last year, opened 17 new stores and 200 Click and Collect sites. The retailer said it would press ahead with 17 stores in 2015, as well as 36 petrol stations, more than 150 remote click & collect sites and 62 refurbished stores.