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Asda reports modest growth for the quarter, but sales slip year-on-year

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Asda joins struggling food sector as growth stalls
Asda joins struggling food sector as growth stalls
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Asda shows 0.5% growth this quarter, but overall sales are slowing as food sector struggles

Reporting a straight calendar quarter, which includes a benefit of the later Easter in 2019, the UK supermarket Asda delivered a 0.5% like-for-like sales growth excluding petrol over the second quarter of 2019.

 

This completed the first half year reporting for the UK’s third largest supermarket, capturing Easter in both years and saw like for like sales decline of 0.3% compared to the same period last year.

 

Speaking on the Walmart earnings call, Walmart CEO Doug McMillon commented on the UK market: “Our results for the quarter reflect the challenges faced by shoppers in this market as the uncertainty surrounding Brexit continues to loom. As the macro issues play out, we’ll continue to help customers navigate these times. We’re improving our price position over last year, especially with our private label products, as well as on-shelf availability. We’re also making progress on key strategic priorities such as online grocery where sales growth outpaced the market in Q2, according to Kantar.”

 

Walmart CFO Brett Biggs added: “Against a challenging backdrop in the U.K., Asda net sales increased 1.3% and comp sales increased 0.5%. While results benefited from the Easter calendar flip, Q2 comp sales faced stronger results in last year’s second quarter when unseasonably hot weather benefitted sales. Gross margin rate declined due to the mix impact of stronger fuel sales, soft sales in higher-margin general merchandise categories, strategic price investments and markdowns. These pressures were partially offset by strong expense leverage as cost savings initiatives offset cost inflation headwinds. Our focus remains on driving innovation and strategic priorities for customers, including growing online grocery and improving price gaps.”

 

Asda CEO and President Roger Burnley added: “If ever a case study on the impact the mood of the nation has on UK spending habits were needed, this quarter has provided it. Consumer confidence levels are at an almost six-year low – due in no small part to the ongoing uncertainty around Brexit and amplified by the impact of weather and tracking against national sporting events in the same period last year. As a result our non-food business has been challenged during the period, however we’re satisfied that our food business has continued to perform well and our online growth continues to outpace the market.”

 

“Growth where customers care remains a key focus of our overall strategy and during the quarter we have continued to expand our award winning vegan range with 35 new products, extended our offer of mobile Scan and Go to 25 stores, invested £22m in refurbishing 9 stores and developed new partnerships – including extending our offer of Sushi Daily counters and working with Just Eat on trialling a one hour grocery home delivery service.

 

Charlotte Morrison, General Manager at Landor, comments: “While Asda’s latest results show its sales are slightly down on last year’s bumper summer, it seems the retailer has actually bounced back from its failed merger attempt fairly strongly. With the discounters eating away at market share, the Leeds-based supermarket has weathered the disruption better than its competitors by remaining true to what it stands for: good value.”

 

Landor continues: “And it isn’t standing still, either. A tie up with Just Eat to enter the grocery delivery market is a positive move, as is its innovative step into pizza delivery. The future looks positive for Asda, as long as it continues to stand for what its customers care about: delivering value – not just pizzas.”

 

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