Asda suffers its worst sales fall in half a decade
ASDA reported its worst underlying sales decline in more than five years yesterday, blaming “unprecedented” change in the grocery sector, as supermarkets fight discounters on price.
The Walmart-owned supermarket said like-for-like sales fell 3.9 per cent in the 15 weeks to 19 April, which is Asda’s third quarterly sales fall and an acceleration on the 2.6 per cent decline recorded in the fourth quarter.
Chief executive Andy Clarke, who has held the top job at Asda for exactly five years, said half of the decline was due to record food price deflation and the supermarket price war.
“Although I still believe that 18 months ago we did a great job of predicting changes, we could not have foreseen what’s happened to others and the moves they had to make in order to restore their business – creating an impact on us in the short-term,” Clarke said.
He added that Asda remained committed to its five-year plan, started two years ago, and insisted that this strategy would pay off in the long term.
Asda was the first of the big four to lower prices, saying in November 2013 that it would spend £1bn on cuts over five years. It was also the first to make thousands of job cuts in a bid to cut costs, and stopped issuing money-off vouchers over a year ago, calling them short-sighted “gimmicks”.
“It is clear that supermarkets are losing market share as discounters continue to grow. However, we are confident that our business is set up for long-term and we won’t be distracted by the short-term,” Clarke said.
Chief financial officer Alex Russo added that Asda’s balance sheet was in “good health”, and that it would not be making any write-downs on the value of its estate, in contrast to the big three, insisting that all its shops were profitable.