Asda has posted a 5.7% decline in like-for-like sales in its first quarter as the supermarket continued to struggle against “fierce competition” as the price war intensified.
It is the seventh consecutive quarterly fall in sales and comes on the back of a drops of 5.8% in the fourth quarter last year, 4.5% in quarter three and 4.7% in the second quarter to 30 June, which CEO Andy Clarke described at the time as the retailer’s “nadir”.
There is a lack of detail in the Asda statement as the supermarket decided not to hold its usual quarterly press conference, with no comment from Clarke.
However, Walmart’s CFO Brett Biggs said: “The UK continues to struggle, due primarily to fierce competition. Improvements in price and product availability throughout the quarter were not enough to overcome traffic and food volume declines in our large format stores.
“However, Project Renewal remains a focus with the aim to simplify and strengthen the customer offer, reduce costs and drive sales. The cost analytics program, which is part of Project Renewal made good progress and delivered savings we were able to invest back into the business.”
Parent company Walmart’s first quarter earnings presentation also showed net sales at Asda were down 3.6% year on year and traffic also fell 5%.
The gross profit rate increased (but it does not go into specifics) as Asda continued to focus on its bottom line at the cost of losing sales. but operating income decreased in the quarter.
Asda committed another £500m to lowering prices in store in January as part of its turnaround programme, Project Renewal, in an attempt to close to price gap with Aldi and Lidl. It comes on top of the original £1bn Asda has already earmarked for price investment across the five years to the end of 2018.
Asda is also putting the brakes on planned expansions in London, its rollout of standalone petrol stations and the development of remote click & collect sites as part of Project Renewal.
Clarke has blamed the decline at Asda on “unprecedented” structural changes in the industry as he accused rivals of chasing short-term gains with massive levels of vouchering.