Market slowdown hits Asda

SUPERMARKET group Asda has warned that trading conditions will remain tough after posting “disappointing” first quarter like-for-like sales.

Like-for-like sales, excluding fuel and VAT, were down 0.3% over the period but Asda said total sales grew in the ‘low single digits’.

However, Leeds-based Asda, which earlier this month announced Andy Bond’s successor as president and chief executive of the supermarket group as chief operating officer Andy Clarke, said profits grew ahead of sales which beat internal targets.

Three hundred new jobs are set to be created at a home shopping centre in North London, while 15,600 colleagues are set to pocket £47m as part of parent company Walmart’s biggest ever sharesave payout.

Asda recently outlined ambitious plans to establish a chain of 100 small supermarkets and 150 non-food stores as the retailer looks to close the gap on rival Tesco.

Asda wants to become the leader in the non-food sector within five years through a combination of growth in its existing core stores, opening smaller supermarkets, the accelerated rollout of its non-food Asda Living format, and by extending its reach online.

Commenting on the quarterly results, Mr Bond said: “As we’ve already said, by our own high standards, our first quarter sales were disappointing. The market has slowed down significantly since the turn of the year, and I expect conditions to remain tough for some time.

“I’m pleased to say that we’re making good progress against the plans we outlined to analysts last month. Our four pronged strategy to build sales and broaden our appeal is beginning to take shape.

“The launch of the Asda Price Guarantee also means both our price position, and price perception has never been stronger.

Doug McMillon, president and chief executive of Walmart International, said: “Asda has recently made good progress towards their strategic goals. I am confident that our strong leadership team, led by Andy Clarke, will continue this progress and deliver positive sales momentum for the remainder of the year.”

Andy Clarke added: “Listening to customers, it’s clearer than ever that the second half of this year will be challenging for them.

“High petrol prices, and the prospect of tax increases from the incoming government are weighing heavily on their minds. It is our responsibility to deliver the plan we’ve laid out, and by doing so help lower the cost of living for our customers.”