Asda sales fall again after Walmart-owned supermarket suffers one of its toughest years yet

 
Kasmira Jefford
Follow Kasmira
An Asda supermarket store logo is pictur
Asda has sunk below the "nadir" called last year (Source: Getty)

Asda has reported its sixth consecutive quarter of decline, after what the supermarket chain described as one its the toughest years yet.

Like-for-like sales slumped by 5.8 per cent in the 13 weeks to 1 January, its fourth financial quarter, taking full-year sales down by 4.7 per cent.

This was an acceleration on the third quarter, when like-for-like sales fell by 4.5 per cent.

However, Asda chief executive Andy Clarke insisted that 2015 was "a successful year" thanks to its steady profits and financial discipline in what is an unstable market.

He said that Asda's five-year plan updated in October last year was paying off and that it was well on its way to closing the price gap with discounters, from 11 per cent today to its target of five per cent.

"Project Renewal is well under way. We are investing and we have confidence to invest," Clarke said. "We are a business that is in financial control...We are not a business in crisis," Clarke said.

In January, Asda announced it was investing £500m into slashing prices on top of the £1bn it has already pledged in a bid to close the gap with discounting rivals Lidl and Aldi.

The supermarket chain was the first of the big four to launch a significant five-year price cutting programme in 2013, as Aldi and Lidl ramped up their expansion and stole increasing market share from the Big Four.

However over the past year it has come under intense pressure as its rivals Morrisons, Sainsbury's and Tesco have launched fightback plans.

Like its peers, Asda has axed jobs across the group and last month announced another 200 redundancies at its head office as part of its target to cut £1bn costs over the next five years.

Clarke admitted that he was surprised by the volume and scale of the promotional activity over Christmas, and sales in certain categories such as wine and spirits were softer as a result.

"There is no doubt that the short term action taken by some companies is having some impact. But we have a long term sustainable strategy, we are investing in price, and we are confident that in the long term, that strategy will win."

He also criticised the tactics that other supermarkets were using to win sales, saying: "We have maintained our price position against the big grocers at a time when they have significantly altered their operating margins to support their organisations. I would suggest that in the medium to long term that is unsustainable."

"We have a clear strategy - we want to get to 10 per cent of the big three [from a price gap of eight per cent today] and five per cent of the discounters. And we are going to manage that in a controlled position rather than knee-jerking or reacting to short term tactics," Clarke said.

Related articles