Asda like-for-likes fell 3.9% in the first quarter but the grocer maintained it “remains a balanced, healthy sustainable business”.
The decline compared with a fall of 2.6% in the fourth quarter, and a 1% fall in its last financial year – the first time in six years that the supermarket giant’s full-year like-for-likes dropped.
Despite the disappointing results for the quarter ending April 19 2015, Asda boss Andy Clarke said he remains committed in its five-year strategy and will not “knee-jerk at the expense of long-term profitability”.
Clarke also said 2015 was proving to be the most challenging year yet for traditional supermarkets.
“Whilst I take no pride in reporting a negative number, we are in a period of expected turbulence, not distress”
Andy Clarke, Asda
He said: “This last quarter has been unprecedented. We have seen deflation in the market and exponential shifts in the industry. Although I still believe that 18 months ago we did a great job of predicting changes, we could not have foreseen what’s happened to others and the moves they have had to make in order to restore their business – creating an impact on us in the short-term.
“Whilst I take no pride in reporting a negative number, we are in a period of expected turbulence, not distress. We won’t buy short-term sales at the expense of long-term profitability. Throughout this period of change in our sector, Asda has been first to market with its response.
“Fundamentally, Asda remains a balanced, healthy sustainable business with a clear direction allowing us to hold our nerve and remain focused on delivering for our customers.”
Asda said that it committed £21m into store hours to improve customer service and said over the last quarter it achieved strong sales and profits from its George Home range.
Asda will increase the number of stores providing click-and-collect to 611, up 94% year on year. Clarke also said it would be opening the UK’s first “intelligent” click and collect pod in June next to a petrol station in St Helen’s – a commuter belt between Liverpool and Manchester.
It will also open its first small-format high street stores in London, in Deptford and Wealdston by the end of this year.
Customers have less disposable income
Asda also revealed research that the recession is still impacting the way consumers are spending, with 83% of consumers saving any discretionary income, rather than spending.
Meanwhile, 43% said they feel like they have less money to spend than before 2008’s economic downturn, and a third of those who feel they have more money are choosing to spend it on family activities.
Clarke added: “Despite signs of a real and sustainable economic recovery, 2015 is setting itself up to be the most challenging year yet for traditional supermarkets.
“Customers are not yet cash-confident, preferring to save rather than spend and, as expected, the market remains turbulent. Despite all this we remain a financially strong and balanced business, one which was first to market with our strategy. I’m fully committed to delivering long-term growth at Asda and focusing on giving customers what they want.”