Asda’s quarterly sales fall after ‘difficult’ 2015

Supermarket Asda has recorded its biggest quarterly sales fall on record, as it slumped during the crucial Christmas trading period.

Speaking on Thursday as parent company Wal-Mart released its results, Clarke admitted 2015 was a hard year as the United Kingdom retail market continued to undergo “significant and permanent structural change”, with fierce competition in the sector. However like-for-like figures for the full year like-for-like sales finished at 4.7% it said, and Clarke remained bullish, insisting that its results “commendably stable” in the context of the wider market, noting that many of its competitors had suffered “severe falls” in profitability.

However, George Scott, senior analyst at Verdict Retail, told the BBC that Asda’s strategy was not yet working: “Asda’s now prolonged story of negative [sales growth] shows that it has not done enough to broaden its appeal beyond price”. Asda lost customers as it withdrew from the Black Friday discounting frenzy in November and was affected by widespread price cuts for clothing and alcohol by rivals.

For the quarter, Walmart reported a profit of $4.57bn, or $1.43 per share, down from $4.97bn, or $1.53 a share, a year earlier.

“While I am cautiously optimistic that our sales will gradually improve, it won’t happen overnight”. The dip was its worst quarterly decline ever and a sixth straight quarterly decline. “Today, from our strong financial position, we are taking another bold step forward in our five year strategy”.

Finance chief Alex Russo said it choose to maintain profits – which were broadly flat – rather than chase after more sales. “That has been Asda’s successful proposition over the last fifty years and that’s what will deliver sustainable growth in the long term”.

“Away from price, Asda has a relatively weak reputation for quality…it also needs to do more to improve its staffing levels, adding reasons to visit, if it is to claw back ground from the discounters”.

While Asda has said previously it will invest more than £1bn (€1.29bn, $1.43bn) to help price cuts, it also promised to ensure that its prices, which are now about 10% higher than Aldi and Lidl, will be only 5% higher in the next few years.