Sales fell by £1bn at Asda in 2015 as rate of decline accelerates

SALES at Asda fell nearly £1bn last year as the pressure increased on the supermarket group. 

The Walmart-owned group was looking for a Christmas miracle after a tough year but instead recorded its worst-ever quarter.

A sales decline in the final quarter of 2014 meant that Asda had softer comparables than earlier in the year.

However sales were down 5.8% in the 13 weeks to January 1 – worse than the previous two quarters of -4.7% and -4.5%, which caused chief executive Andy Clarke to describe it the period as a “nadir” for the business. The retailer has now had six consecutive quarters of falling sales.

The final quarter’s figures contributed to a full-year performance of -4.7%, which resulted in a drop in sales of around £970m from 2014’s £20.7bn total, excluding fuel.

Asda has been more focused on maintaining profits rather than sales and has the benefit of being privately owned by the American retail giant. Although it has yet to disclose its 2015 profit figure, Walmart has said its UK business has seen an increase in its gross profit.

“Our strong financial position has allowed us to take bold and fundamental decisions about the way we need to run the business,” said Mr Clarke.

“We have taken control of our own destiny, and are not at the mercy of market pressures or whatever our competitors feel is necessary.

“While I am cautiously optimistic that our sales will gradually improve, it won’t happen overnight given that 2016 is likely to be another tough and competitive year for the sector as a whole.”

Asda’s response to the pressures within the sector has come in the form of Project Renewal, which it launched last October. The 18-month programme has been designed to “extend Asda’s everyday low price”.

Mr Clarke added: “Project Renewal is the right strategy to get us back on the front foot, using our market leading value proposition to give our customers low prices and unbeatable value.

“That has been Asda’s successful proposition over the last fifty years and that’s what will deliver sustainable growth in the long term.”