Asda’s like-for-like sales excluding VAT and petrol have fallen 0.3% in its first quarter and the grocer expects conditions to remain tough.
The Walmart owned grocer – which last week promoted Andy Clarke to chief executive – said its total sales growth is in the “low single digits” in the quarter to March 31. It said its profits grew ahead of sales, beating internal targets.
The whole grocery sector has showed signs of like-for-likes slowing. Last month Morrisons reported its like-for-likes had slowed, but were still positive, at 0.8%, showing Asda is suffering more than its rivals.
Andy Bond, former chief executive, now chairman of the Asda executive committee said: “As we’ve already said, by our own high standards, our first quarter sales were disappointing. The market has slowed down significantly since the turn of the year, and I expect conditions to remain tough for some time.”
Asda has had a tough start to the year, hampered by the snow at the beginning of the year, and the fierce promotional price war. Last month it set out a five-year strategy to become non-food market leader, and clear number two in food.
Bond added: “I’m pleased to say that we’re making good progress against the plans we outlined to analysts last month. Our four pronged strategy to build sales and broaden our appeal is beginning to take shape.
“On price our renewed focus on EDLP means we’ve successfully reduced the number of promotions in store. The launch of the Asda Price Guarantee also means both our price position, and price perception has never been stronger.
“On quality we have extended the 100 Day Guarantee to the entire George range, and have innovative plans to extend this approach to other areas of the business. Our own label food also continues to win more awards than our major rivals.
“On service we’re investing heavily to reduce queues and improve the customer experience. And on range there are some exciting developments coming in the second half of the year.”
Andy Clarke said: “Listening to customers, it’s clearer than ever that the second half of this year will be challenging for them. High petrol prices, and the prospect of tax increases from the incoming government are weighing heavily on their minds. It is our responsibility to deliver the plan we’ve laid out, and by doing so help lower the cost of living for our customers.”
Asda has also revealed it invested £12m in stores to help reduce queues and assist in customer services.
Asda will also extend its online capacity in north London by around 50%, following exchanging contracts on a second home shopping picking centre.