Asda sales and profits collapse amid 'intense competition' from Aldi and Lidl

Profits sank 19 per cent to £791.7m, annual accounts filed at Companies House show

Ben Chapman
Wednesday 02 August 2017 09:38
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The new chief executive has slashed the prices of everyday items by an average of 15 per cent, in an attempt to arrest falling sales
The new chief executive has slashed the prices of everyday items by an average of 15 per cent, in an attempt to arrest falling sales

Asda has revealed a lacklustre set of full-year figures for 2016, as profits collapsed and the supermarket failed to stem falling sales.

The Walmart-owned company’s like-for-like sales were down 5.7 per cent in 2016 compared with a year earlier, while profits sank 19 per cent to £791.7m, annual accounts filed at Companies House show.

Low-cost Asda has been hit hardest by the rise of discount rivals Aldi and Lidl, and has also failed to make headway into the convenience sector, which has grown strongly as large-store sales have stalled.

As a result, the supermarket chain has reported 11 consecutive quarterly falls in sales.

“The grocery market has continued to experience low growth throughout the year and competition in the sector has remained intense,” the company said in a strategic report accompanying its annual accounts.

“Our sales performance, relative to the market, was behind our expectations.”

Asda’s market share fell 0.9 per cent to 15.7 per cent in 2016, according to data company Kantar. Last August, Asda posted its worst ever quarterly sales fall of 7.5 per cent.

Despite the slew of bad news, Asda pointed to increased efficiency savings and new deals with suppliers, as the beginnings of a turnaround under new chief executive Sean Clarke.

Mr Clarke, who took the top job last summer, has slashed the prices of everyday items such as beef, chicken and sausages by an average of 15 per cent in an attempt to arrest falling sales.

The first sign that the approach may be beginning to bear fruit came in May this year, when Kantar reported Asda’s sales rose 0.8 per cent – the first year-on-year sales increase since October 2014.

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