Asda sales climb as its clothing operation ‘outperforms’ rivals

Leeds-headquartered Asda has released its results for the first quarter ended 31 March, delivering a 6.6% increase in total revenues (excluding fuel) to £5.3bn and 1.4% growth in like-for-like sales.

The supermarket chain’s growth in total revenues, like-for-like sales and margin improvement in food and non-food includes a particularly strong contribution from George at Asda, which is reported to have outperformed the fashion and homewares markets during the quarter.

George grew its total clothing revenues by 3% to £293m in the first quarter and by 3% on a like-for-like basis.

Online grocery also performed well, representing 18% of food sales, driven by a 5.6% increase in the number of average weekly orders in quarter one.

The retailer reports a 1.3% increase in like-for-like grocery sales during the quarter.

Mohsin Issa, Asda co-owner, said: “Asda made good progress against its strategy in the quarter, laying the foundations for long-term success – including completing the conversion of our newly acquired sites to Asda Express, as part of our strategic expansion into the growth markets of convenience and food-to-go.

“We did this while continuing to deliver great range, value and convenience, including investing in lower prices and the quality of our food and non-food at a time when the household budgets of our customers remain under pressure.

“George at Asda again outperformed the value market in fashion and homewares, and it is very encouraging to see our investment in the brand bearing fruit both online and in stores.”

Michael Gleeson, chief financial officer, said: “Today’s results are further evidence of the underlying strength of the Asda business.

“Since the shareholder group acquired the business in June 2021, they have invested more than £3.5bn to grow the business organically and via strategic acquisitions and a further £800m to replace legacy Walmart IT infrastructure with new bespoke Asda systems.

“This has transformed Asda into a diversified retail group, with a significant presence in the fast-growing convenience and food-to-go markets.

“A key focus now is to invest in enhancing the customer experience in our larger supermarkets and superstores having done the heavy lifting converting acquired convenience stores to Asda Express.

“Earlier this month, we completed a significant refinancing, extending most of our debt obligations into the next decade.

“This provides us with a robust and stable capital structure and the capability to continue investing to deliver our ambitious long-term growth plans.”

During the quarter, the business completed the conversion of about 470 convenience sites acquired from the Co-op and EG UK to Asda Express, increasing its total store estate to over 1,200 sites – the largest in its 59-year history.

The retailer says it remains on track to reach 500 Express convenience stores by the end of this year.

Asda has now begun a £50m store upgrade programme to improve the customer experience across 173 stores.

Post quarter one, Asda refinanced more than £3bn of its debt. Its net debt at the end of the quarter was £3.8bn, net of more than £1bn cash on the balance sheet. The business says it is “fully committed” to further deleveraging.