Asda’s profits climb but revenues dip below £23bn

ASDA has reported a rise in pre-tax profits but a fall in sales last year amid “ever increasing competitive conditions”.

The supermarket’s pre-tax profits climbed 5.2% to £633.3m in the year ending December 31, 2015.

However, according latest accounts for Asda Group Limited, the retailer’s revenues slipped from £23.1bn in 2014 to £22.06bn.

Sean Clarke arrived from Walmart China in July to take over at the Leeds-based group and has been forging ahead with the delivery of ‘Project Renewal’ which is focusing on retail basics.

But the retailer said market continued to be challenging with slowing wage growth and inflation rises in the last three months of the year.

“Despite this, year on year customers had more money in their pockets as a result of a strengthening pound, employment growth and falls in commodity prices,” Asda said.

“However, the grocery market has experienced only minimal growth due to exceptional levels of price deflation caused by ever increasing competitive conditions.”

The grocer said it continues to focus on price for its customers, maintaining its price leadership and is pushing ahead with its pledge to invest £1bn over five years.

Asda opened 37 stores during the year, including eight superstores and 29 small shops including standalone petrol stations, adding 403,00 sq ft of space.

According to research Kantar, Asda’s market share was down 0.5% for the year, to 16.6% in the 52 weeks to January 3 2016.

The latest results follow the supermarket announcing its worst-ever quarterly sales fall last month.

Figures released by its American owner Walmart revealed that Asda’s like-for-like sales were down 7.5% for the second quarter, excluding fuel – significantly down on the first quarter drop of 5.7% that preceded Andy Clarke’s departure as Asda boss.

Asda has suffered eight consecutive quarters of falling sales.