Asda’s sales shrink as rivals gain ground

Asda has posted a 5.3% decline in underlying sales in the three months to the end of June as it continues to underperform its rivals.

Britain’s third biggest supermarket group said total revenues excluding fuel fell by 2.2% to £5.3bn in quarter two, with like-for-like sales 5.3% lower.

Competitors such as Morrison’s, Tesco and Sainsbury’s have been slowly taking Asda’s market share.

Despite this, Asda delivered total revenue growth, excluding fuel, of 2% in H1, with a 2.1% decline in like-for-like sales.

The supermarket, which is majority owned by Mohsin Issa and private equity firm TDR Capital, said it continued to deliver a strong online performance in grocery and clothing in the quarter while the group increased online grocery sales – which now account for 18% of its total food revenue – by 1.4% in Q2.

Its clothing line George grew its online revenues by 3.9% in Q2, while clothing sales decreased 3.9% on a like-for-like basis, which it said was partly due to its “strategic decision not to participate in significant promotional activity across the fashion sector”.

Mohsin Issa, Asda’s co-owner, said: “These results highlight a period of robust online performance and a record start to George’s Back-to-School campaign. Despite a challenging retail environment, George.com sales rose by 3.9% and online grocery increased by 1.4%, underscoring our steadfast commitment to delivering quality and value to our customers. Asda Rewards continues to go from strength-to-strength and now accounts for 52% participation in all transactions.

“As we move forward, we remain committed to maintaining our value credentials, enhancing the product offer, and executing our long-term growth strategy to build an even stronger Asda for our customers and communities.”

Michael Gleeson, CFO at Asda, said: “We continue to make progress by investing in bringing our quality and value offering to more customers across the UK, with Asda’s food price inflation trending lower than the market.

“We have made great progress over the last few years in transforming Asda into a diversified retail group, much of which is almost complete. However, we also know that there are some areas where we can and need to improve. We have today set out clear and decisive action to deliver a more consistent customer experience – to match the uncompromising value we offer. We remain confident in the underlying strength of the Asda business as we execute our long-term growth strategy.”