Asda profits increase despite flat like-for-likes over Christmas as it plots George's online expansion

In the 14 weeks ending January 5, like-for-likes, excluding petrol, increased 0.1% while full year like-for-likes edged up 1%.

Asda president and chief executive Andy Clarke said: “We’re pleased with our results in a tough market. We continued to grow our sales while also investing in holding down the price of essentials, increasing access points to Asda’s value and putting money back in customers’ pockets when they need it the most.”

The grocer focused on investing in price over the quarter, however it still increased gross profit.

Walmart International president and chief executive Doug McMillon said: “Despite food inflation in the marketplace increasing, Asda’s price investment resulted in our customers seeing a lower level of food inflation in their basket and reinforced our price position in the market.”

“Looking ahead, we expect the market to remain tough in 2013 for our consumers.  The marketplace remains very competitive, which is good for the customers and keeps us sharp.  We are confident that our EDLP message continues to build loyalty and market share.”

Clarke said that Asda had enjoyed volume growth since the start of 2013 following a £100m investment in lowering prices in the last six month. This contrasts with negative volume growth in the wider grocery market for three years.

The grocer has unveiled plans to launch a digital offensive on international markets by opening up the website of its fashion brand George to 24 European countries after a pilot in the Republic of Ireland.

The initiative follows what Clarke described as Asda’s “biggest online Christmas ever”. Total online sales climbed 18.8% over the quarter.

George.com, one of the fastest growing online fashion retailers in the UK, will begin delivering to shoppers in Belgium, Denmark, France, Luxembourg, the Netherlands, and Spain first as part of a phased expansion to be completed by July this year.

Asda will also ramp up its store presence overseas. In April, George will open a franchise store in Sharjah, United Arab Emirates (UAE), followed by a second in Amman, Jordan, in May. Further shops in the UAE, Kuwait and Qatar will open later in the year.

George opened its first overseas stores last year through franchise partners Azadea Group in Abu Dhabi.

The brand is also stocked in stores of parent Walmart in 35 countries including the US, Canada and Japan.

George is the third largest UK clothing retailer by volume and value, according to Kantar Worldpanel data seen by Retail Week, and is estimated to generate £1.2bn in annual turnover.

George boss Andrew Moore said Asda had “invested heavily” in developing the George brand. “Our international growth strategy is focused on three key areas: franchising, online expansion and leveraging our relationship with Walmart,” he said.

Asda shut its George shops in the UK in 2008 after struggling to make profits.

Moore is also looking to build a “virtual bridge” between Leeds and Walmart’s headquarters in Bentonville, US to improve leverage of joint sourcing.

The grocer is also set to launch its first baby pop-up shop in May at the Birmingham NEC Baby Show. Moore said the grocer will use the mobile tills to offer different products at events such as Glastonbury. “It’s about convenience. It’s a big factor for customers. Now we have the technology to have mobile tills we can use them for anything,” he said.

Retail-week.com revealed yesterday Asda has hired business consultancy McKinsey & Company to advise it on a strategic review, led by Asda boss Andy Clarke, to form a plan for growth over the next five years.

The strategy is likely to put boosting Asda’s multichannel credentials at its heart.

It is also expected that, given the changing conditions faced by retailers generally and the rapid rise of etail, elements of the five-year strategy laid out by former Asda chief executive Andy Bond three years ago will be rewritten.

His strategy included transforming Asda into the number one non-food retailer by 2015.