Asda second-quarter sales boosted by later Easter

The supermarket giant recorded a 0.5% increase in like-for-like sales during the three months to June 30, while total sales grew 1.3%.

The number of transactions Asda registered during the three-month period dipped 0.2% in like-for-like terms. Gross profit and operating income also declined, though parent company Walmart did not reveal exact figures for those metrics.

Walmart said Asda enjoyed sales growth despite “lapping difficult comparisons” and warmer weather last year. It added that “uncertainty surrounding Brexit continues to affect customers” in the UK.

Asda had racked up seven consecutive quarters of growth under the stewardship of chief executive Roger Burnley and his predecessor Sean Clarke, before a 1.1% drop in like for likes in its first quarter brought that run to an end. 

The grocer blamed the later date of Easter for the decline. It said, after stripping out the impact of the timing of the four-day weekend, same-store sales would have increased 0.5% during the three months to March 31.

Burnley said: “If ever a case study on the impact the mood of the nation has on UK spending habits were needed, this quarter has provided it. Consumer confidence levels are at an almost six-year low – due in no small part to the ongoing uncertainty around Brexit and amplified by the impact of weather and tracking against national sporting events in the same period last year.

“As a result, our non-food business has been challenged during the period; however, we’re satisfied that our food business has continued to perform, well and our online growth continues to outpace the market.”

During the quarter, Asda said it focused on growth in the areas “where customers care”. It launched 35 new vegan ranges during the period and invested £22m in refurbishing nine stores.

Walmart boss Doug McMillon said of Asda’s performance: “Our results for the quarter reflect the challenges faced by shoppers in this market as the uncertainty surrounding Brexit continues to loom. As the macro issues play out, we’ll continue to help customers navigate these times.

“We’re improving our price position over last year, especially with our private label products, as well as on-shelf availability. We’re also making progress on key strategic priorities such as online grocery where sales growth outpaced the market in Q2, according to Kantar.” 

Walmart is mulling an Asda IPO after the Competition and Markets Authority blocked its proposed merger with big-four rival Sainsbury’s earlier this year. 

The US giant’s international boss, Judith McKenna, told colleagues in May that such a process was being considered but it could take years to come to fruition.

In the meantime, Asda is seeking fresh ways to build its business. Last month, it revealed it was extending its tie-up with online food delivery specialist Just Eat to offer customers in Sutton and Leicester a rapid 30-minute grocery home-delivery service. 

Despite its ongoing progress, Asda is facing a backlash over changes to the contracts of around 3,000 shopfloor workers.

Dozens of staff protested at its head office in Leeds yesterday in a demonstration led by the GMB. The union said Asda has used “bullying” tactics to get workers to sign contracts that will leave them worse off, by stripping out unpaid breaks and premium pay for certain bank holidays.

Burnley said: “Whilst I remain proud of our continued strategic focus in the quarter, I am under no illusions as to how challenging this market remains for all retailers – and that we must continue to maintain our relentless focus on delivering a consistently trusted experience for our customers and having the most efficient operating model possible.

“We continue to work through our contract changes with colleagues and whilst we recognise that change is always difficult, we continue to believe this is the right and necessary approach for us to take in order to remain a sustainable business that delivers for customers.”