Asda sales growth slows in third-quarter

Asda has been hurt the most by the rise of discount supermarkets as its traditional price advantage has been eroded

Asda has had to cope with more expensive food imports since the vote for Brexit (PA)

Asda, the UK supermarket arm of Walmart, the world’s largest retailer, on Thursday reported a slowdown in its rate of sales growth despite industry inflation and very weak comparative numbers.

Asda and its major rivals -- market leader Tesco, Sainsbury’s and Morrisons -- are all grappling with the rapid growth of German discounters Aldi and Lidl.

They are also having to cope with more expensive food imports due to a weaker pound since Britain voted to leave the European Union, while consumer spending is under pressure from rising inflation, subdued wage growth and economic uncertainty.

Of Britain’s major players Asda has been hurt the most by the rise of the discounters as its traditional price advantage has been eroded. Walmart has said Asda was too slow in responding to that competition.

Last month Asda said chief executive Sean Clarke would in January step down after just 18 months in the job and be replaced by head of operations Roger Burnley.

Asda said its like-for-like sales rose 1.1 per cent in the three months to 30 September, its fiscal third quarter.

That compared to a rise of 1.8 per cent in the previous quarter and marked the second straight quarter of underlying sales growth. Prior to that it had endured three years of sales falls.

“Customers continue to respond to investments in the value proposition,” said Walmart’s chief financial officer Brett Biggs.

“While we are pleased with the improved performance in the business we know we have more work to do,” he said.

Asda’s comparative numbers were extremely weak - in the same period last year like-for-like sales slumped 5.8 per cent. Asda would also have benefited from food price inflation across the industry - running at 3.4 per cent according to the latest industry data.

Last week Marks & Spencer said its food business faced “stronger headwinds” and said it would slow openings of its upmarket convenience stores, while Sainsbury’s said shoppers were currently “very value conscious”.

Reuters