Discounts and web sales drive profits at Asda

ASDA posted a 1.3 per cent rise in first quarter underlying sales yesterday, as price reductions and its online offering proved popular with shoppers.

Britain’s second-biggest supermarket chain behind Tesco said sales at shops open over a year, excluding fuel and VAT, rose 1.3 per cent in the 14 weeks to 12 April.

That followed a rise of 0.1 per cent in the fourth quarter of the previous financial year.

Asda, which has been investing more in 50p and £1 lines and lowering prices on essentials like milk, eggs and bread, said online sales grew by over 16 per cent in the first quarter. The firm’s market share remained unchanged at 17.9 per cent, it added.

“This represents a strong performance in what remains a very tough market,” Asda chief executive Andy Clarke said.

“Despite a difficult environment for our customers, we have continued to achieve growth on growth by lowering the prices of essentials and investing in technology to make shopping more convenient.”

Asda’s sales update was released as parent Wal-Mart, the world’s largest retailer, posted a higher quarterly profit, despite underlying sales falling 1.4 per cent.

Wal-Mart said that this quarter would be challenging and gave a forecast that suggests profit will again miss Wall Street expectations, due in part to costs from its foreign bribery probe.

The company also reported quarterly earnings just below Wall Street estimates, and revenue came in lower than expected. Everything from tax pressures on shoppers to a cool start to spring led to an unexpected drop in sales at Walmart US stores open at least a year.

Wal-Mart earned $3.78bn , or $1.14 per share, in the first quarter ended on 30 April, up from $3.74bn, or $1.09 per share, a year earlier.

The company said it expected second-quarter same-store sales, excluding those of fuel, to be flat to up two per cent at Walmart US.