Asda has reported its worst ever fall in quarterly like-for-like sales, underlining the mammoth task facing new boss Sean Clarke as he attempts to lure back shoppers from the discounters.
Asda said like-for-like sales fell 7.5 per cent in the three months to June 30, which was a lot worse than the 5.7 per cent fall in the three months to March 30. This will be a major disappointment to the firm at a time when arch rivals Tesco, Sainsbury’s and Morrisons have reported improving underlying sales.
Doug McMillon, CEO of Asda’s parent company Wal-Mart said: “In the UK, the competitive environment and food deflation continued to challenge the market, significantly impacting traffic and comp sales.
"Our strategy to turn things around is focused on improving the retail basics. 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.”
Wal-Mart’s CFO Brett Biggs added: “In the UK, fierce competition and food deflation continue to challenge the market, significantly impacting traffic and comp sales trends. “During the quarter, comp sales, excluding fuel, decreased 7.5 per cent. Our strategy remains focused on improving retail basics; simplifying and strengthening the offer through improved availability and assortment discipline, reducing costs through our cost analytics program and driving sales through strategic price investments where we remain committed to the previously announced five year £1.5bn price investment.”
Asda reported a 5.8 per cent decline over Christmas, which had been its worst ever quarterly performance.
In an attempt to turn the firm around, Asda’s parent company Wal-Mart has shipped in retail veteran Sean Clarke, a former Asda director, who took over as CEO on July 11 replacing Andy Clarke. Prior to this, Sean Clarke was head of Wal-Mart’s Chinese operations.
Worryingly, Asda is seeing a five per cent drop in the number of shoppers visiting its stores, signalling a failure to stem the rush to Aldi and Lidl. Asda usually comes top out of the big four in terms of basket prices, but shoppers on a budget can get goods for around 10 per cent less at Aldi and Lidl.
The latest Kantar Worldpanel data shows that Asda is the worst performer out of the big four supermarkets.
This is at a time when Aldi and Lidl are seeing sales increases of over 10 per cent as shoppers continue to desert Asda in favour of the discounters.
Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, said: “It’s not good news for Sean Clarke. Asda needs to look at the weapons in its armoury. They will be thinking very hard about price.”
Asda is rumoured to be mulling a big new wave of price cuts in order to win back customers.
Asda is focusing on a revival plan, dubbed Project Renewal. It is on track with moves to slash costs, having announced in January it would cut hundreds of UK jobs, largely impacting its head office, which employs 3,000 people.
Wal-Mart, the world’s biggest retailer, has confirmed that Dewsbury-born Roger Burnley will be named deputy CEO and chief operating officer at Asda when he rejoins the business in October.