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Aug 18, 2016
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UK supermarket Asda has worst ever quarter

By
Reuters
Published
Aug 18, 2016

Supermarket chain Asda, the British arm of Wal-Mart, reported its worst ever quarterly sales performance on Thursday, blaming fierce competition and food deflation.



Asda, which replaced its chief executive last month, said sales at stores open over a year, excluding fuel, crashed 7.5 percent in the three months to June 30, its fiscal second quarter.

It represents a further deterioration on the previous quarter's fall of 5.7 percent and an eighth consecutive quarter of decline.

"The competitive environment and food deflation continued to challenge the market, significantly impacting traffic and comp sales. Our strategy to turn things around is focused on improving the retail basics," said Wal-Mart CEO Doug McMillon.

"While our turnaround will take time, I'm confident in the new leadership team there and want to assure you we're addressing this with urgency," he said.

The industry has been cutting prices to try and counter the rise of German discounters Aldi and LIDL.

Sean Clarke took over from his namesake Andy Clarke as Asda CEO on July 11, tasked with shifting the balance of the grocer's strategy from protecting profits to protecting market share.

McMillon said Asda would simplify and strengthen its offer through improved product availability, reduce costs and drive sales through strategic price cuts.

Of Britain's big four supermarkets, which also includes market leader Tesco, Sainsbury's and Morrisons, Asda has been the laggard in sales terms for two years, losing customer traffic and food volume in its large format stores.

However, in the same period Asda has been Britain's most profitable grocer as, unlike rivals, it has opted to protect profit margins.

At 1147 GMT shares in Tesco were up 1.6 percent. Sainsbury's and Morrisons shares were up 2.2 percent and 1.7 percent respectively.

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