The supermarket price war is hurting Asda, as it emerged today that sales for the company fell by 7.5 per cent in the three months to 30 June – its worst quarterly performance on record.
Doug McMillon, chief executive of parent company Walmart, said: "In the UK, the competitive environment and food deflation continued to challenge the market, significantly impacting traffic and comparable sales.
"We are simplifying and strengthening our offering through improved availability and assortment discipline, reducing costs and driving sales through strategic price investments. While our turn-around will take time, I’m confident in the new leadership team there and want to assure you we’re addressing this with urgency."
Walmart finance chief Brett Biggs said "fierce competition and food deflation continue to challenge the market" and that the company plans to focus "on improving retail basics" going forward.
HSBC recently predicted Asda would be likely to reposition on price, sparking a share sell-off for the big four supermarkets.
But for now, it appears Asda has been struggling to compete with the discounters such as Aldi and Lidl – while they continue to gobble up more and more market share. Aldi currently has its sights on a 10 per cent share of the UK market.
Paul Thomas, senior consultant at Retail Remedy consultants, said: "The limping Asda ship has a new captain and for Sean Clarke’s first trading update, it could be no worse. It is too soon for the new CEO to have had any significant impact but a 7.5 per cent decline in like-for-like sales is apocalyptic for Asda.
"There is absolutely no honeymoon period for Sean Clarke: it's a case of get in there and power up the defibrillator."