Asda’s pre-tax profit shrank 10% last year despite an increase in like-for-likes.
Pre-tax profits fell to £712.6m while operating profits dropped 13% to £735.4m.
Total sales hit £22.2bn, up 0.8% in the year to December 31, 2017. Sales fell 4.3% during the previous year. Like-for-likes inched up 0.5%.
The supermarket, which is set to merge with Sainsbury’s, said operating profit was in line with expectations and that the decrease was driven by planned strategic investments in price, quality and service.
Those investments led to like-for-like growth over four consecutive periods after a period of tough trading for the Walmart-owned grocer. Like-for-likes grew 1% over the first quarter of 2018.
Online sales grew ahead of the market during the year, and it added that it had focused on removing service defects and friction from the online experience.
Asda president and chief executive Roger Burnley said: “Our 2017 accounts reflect a solid performance and a strong, well-managed business.
“During the year momentum returned, driven by a series of planned investments in lowering prices, further improving quality and innovation in our own brand ranges and providing an even better shopping experience whether in-store or online.
“Our customers have responded well to this strategy and the momentum of 2017 has continued into the first quarter of 2018.”
Asda opened one new home shopping centre, three new superstores and five new supermarkets over the year.
Its deal with Sainsbury’s, currently being examined by the CMA, would create a £13bn mega-merger, in which Asda owner Walmart retains a 42% stake.