Asda fourth quarter sales drop but rate of decline slows

The Walmart-owned grocer said sales dropped 2.9% in the fourth quarter ending January 27, compared to a 5.8% slump during the comparable period a year ago.

Asda said shopper numbers slipped 1.8% during the period, while the average basket size decreased 1.1%.

Operating profit also declined, although Walmart did not break out a profit figure for its UK business.

In its results presentation, Walmart said sales remained “under pressure”, but lauded “early signs of improvement in the customer value proposition”.

Asda is focusing its efforts on simplifying its offer, improving availability and investing in price as new boss Sean Clarke, who was parachuted in from Walmart’s Chinese business in July to replace Andy Clarke, battles to transform the grocer’s fortunes following a turbulent few years.

Clarke said: “We are encouraged by the early signs of our customers responding positively to the hard work that’s been happening in our stores throughout 2016, which saw us welcome over 140,000 customers back to Asda this last quarter.

“We are putting customers first and have sharpened our prices, improved our ranges and availability, all with friendly service.

“While we have a lot to do, it is great to see our colleagues, who really make the difference, engaged in this change in doing what’s right for customers.”

Walmart president and chief executive Doug McMillon added: “In the UK, we faced some challenges this past year and we’re addressing this with urgency. I’m glad comparable store sales improved during the fourth quarter, but we have a lot of work to do.”

Customers deserted Asda in their droves amid intense price competition from the discounters, while its big four rivals Tesco, Sainsbury’s and Morrisons also invested heavily in improving quality and reviewing ranges.

Asda ploughed cash into price last September as Clarke stepped up efforts to win shoppers back, but the supermarket giant will be assessing other areas of its strategy as it attempts to return to growth.

Morrisons has opened up a fresh revenue stream by supplying fresh, frozen and ambient food to Amazon, while Sainsbury’s has purchased Argos as it increases its focus on non-food.

Meanwhile market leader Tesco has agreed a £3.7bn deal to acquire Booker to tap into the fast growing convenience and foodservice markets.

The trio of deals have cast Asda even further adrift in the big four battle, but the latest Kantar data suggested that it was showing signs of recovery, stemming its rate of sales decline to 1.9% during the 12 weeks to January 29.