Asda to make £750m investment despite Christmas quarter sales dip

ASDA, the Yorkshire-based supermarket chain, announced that it will invest £750m in opening new stores, extensions and refurbishments in 2014, despite reporting that like-for-like sales were down in its Christmas quarter.

Asda, the British arm of US retailer Wal-Mart, said sales at stores open over a year, excluding fuel and VAT sales tax, were down 0.1% on a year ago in the 13 weeks to Jan 3.

That compares to a third quarter rise of 0.3%.

Andy Clarke, president and chief executive said: “It will come as no surprise that 2013 was a tough year for UK retailers and there’s little doubt that the UK retail market is undergoing significant and permanent structural change. Though the economy is showing signs of recovery, it is still susceptible to shocks and the benefit is not yet being felt right across the country. Yet, despite these continued challenging conditions, I am proud that Asda continued to drive volume growth and deliver great price, quality and service for our customers.”

Clarke spoke alongside newly appointed chief financial officer Alex Russo, and chief merchandising officer (Food) Barry Williams.

Russo, who joined Asda in January from the Delosi Group spoke of his excitement at joining Asda and highlighted how the retailer was executing its strategy with “agility and pace”, already expanding its Click and Collect operation to 300 outlets and launching the new ‘George Home’ range.

Williams outlined the rationale behind Asda’s move away from vouchering activity in 2013 saying: “Retailers are using vouchers to cover up price increases – what they are giving away with one hand, they are taking back with the other. That’s not a game we are interested in playing with our customers’ hard earned money.”

Commenting on the year’s performance and strategy for 2014, Clarke said: “We’re under no illusions as to the structural changes facing our sector and that is why we took early action to look at how we need to move our business forward in the next five years to redefine value retailing in the UK. We outlined that strategy in November and we have been delivering to it with energy and pace over the last quarter – accelerating our investment to over £60m Q4 to rebase our pricing and drive even harder on our quality agenda.

“We’re playing the long game and the decisions we’re taking now will ensure the long-term growth and health of our business and do the right things for our customers. This year alone, we will invest £200m into lowering prices and £750 million in further developing our estate.” as we look to expand our reach across the UK, and particularly in the London and south east.”

At the end of last year, Asda set out its six strategic priorities to redefine value retailing in the UK over the next five years. The strategy centres around improving the core business; extending Asda’s reach and expanding the brand into new markets.

The retailer said it will achieve this by investing £1bn in lowering prices and £250m in quality, style and design; and giving more people the opportunity to shop with Asda through the physical development of stores and over 1000 Click and Collect locations.

Asda also plans to increase physical access to its brand from 53% to 70% by 2018.