Sainsbury’s and Asda merger: Current trading at both ‘Big Four’ supermarkets

The merger would shake up the UK’s supermarket sector, giving the combined grocery business a market share larger than Tesco.

Sainsbury’s and Asda are the second and third-largest supermarkets by market share. The latest figures by analysts Kantar show Sainsbury’s with 15.8% and Asda at 15.6%. Tesco remains the clear market leader with 27.6%.

Asda’s current trading figures showed that during Q1, for the period ending 31 March 2018, Asda delivered its fourth consecutive quarter of positive like-for-like sales growth.

The Leeds-headquartered supermarket, which has been owned by American giant Wal-Mart since 1999, has had a tough few years. It has struggled to fight off competition from the discount supermarkets, led by Aldi and Lidl, which has led the whole sector to squeeze margins.

In the financial year to 31 December 2017, Asda saw a 2.6% growth in estimated sales to £22.2bn and a return to positive like-for-like growth for the full year. It said this was driven by a return to volume growth in own label grocery and fresh food, supported by price and quality investments.

For the year ended 31 December 2017, Asda generated revenues of £22.2bn and operating profit of £720m (2016: £845m). Asda was founded in 1949 and currently employs over 146,000 people across the UK.

It has a network of 584 grocery stores, 18 petrol filling stations, 33 Asda Living stores and also online. In addition to grocery and general merchandise, Asda also operates George, a leading UK clothing retailer by volume, with both an in-store and online offering. Asda has a significant property portfolio, of which 75% of the square footage is freehold.

Meanwhile, Sainsbury’s this morning published its annual trading figures to March 20 2018. It underlying pre-tax profits was £589m. 

The supermarket delivery £185m cost savings in the year, bringing the total to £540m over three year. It plans to deliver further cost savings of at least £500m over the next three years to 2020/21, starting with £200m in savings this year. 

Sainsbury’s acquired Home Retail Group, the owner of Argos and Habitat, on 2 September 2016. The supermarket operates over 600 Sainsbury’s supermarkets and more than 800 Sainsbury’s Local convenience stores, as well as over 800 Argos stores – more than 2,200 locations in total.