Norman rejects loyalty card as Asda surges

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The Independent Online
Archie Norman, Asda's chairman, remained resolutely opposed to the idea of introducing a loyalty card at the supermarket chain yesterday, as he announced strong profits and sales growth in the half-year to November.

"The old maxims are often the best. Keeping it simple has been the key to our success," he said, as he reported another bumper like-for-like sales performance from the Leeds-based multiple grocer. Sales from existing stores grew by 10.2 per cent in the six-month period, which compared with growth of only 7 per cent from Tesco, 5.1 per cent from Safeway and 2.3 per cent from Sainsbury.

Allan Leighton, who succeeded Mr Norman as chief executive earlier this year, added: "Our continued outperformance of the industry is evidence of progress towards our Breakout goal of becoming Britain's best value fresh food and clothing superstore." Breakout is a three-year improvement programme launched by Asda in 1995.

Profits in the half year before a pounds 73m exceptional profit from the sale of the group's stake in Allied Carpets increased 15.8 per cent to pounds 160.1m. Earnings per share increased by a similar margin to 4.06p and the dividend rose 12.5 per cent to 0.81p. Asda's shares, which have risen from a low of 23p in1992, closed 1.75p higher at 125.5p.

Since Mr Norman joined Asda in 1992 to reverse its fading fortunes, the group's return on sales has more than doubled despite a gradual decline in the return on assets enjoyed by the industry as a whole. Yesterday he said Asda had overtaken the average of its three big rivals on that measure for the first time.

Announcing a continuation of Asda's creed, "Simplicity is divinity", Mr Norman said: "Our competitors are looking for other things to do. We have nothing against loyalty cards, but we believe our success is more to do with being radical and doing things with pace."

With all the big grocery chains copying each others initiatives, he added, the trick was to stay ahead of the game and to focus on the core business rather than moving into peripheral areas such as financial services.

Asda's strongest performers in the period were fresh food and clothing. Meat sales rose 19 per cent, produce 14 per cent and bakery sales were 13 per cent higher.

The George clothing brand saw a 35 per cent increase in sales with children's wear and ladies' outerwear especially strong.