Asda has suffered a drop in full-year profits as costs incurred during the coronavirus crisis weighed on its bottom line. 

In documents filed at Companies House, Asda said operating profit tumbled 16.7% to £486.5m in the year to December 31, 2020. 

Asda blamed the decline on a tranche of Covid-related costs, including hiring 22,000 temporary colleagues to cover staff absence, shielding 15,000 vulnerable colleagues on full pay and delivering 2.6 million online orders to shielding customers free of charge.  

The statutory accounts for Asda Group Limited – which includes all Asda stores, petrol stations, distribution centres and online operations – revealed a 3.6% uplift in sales to £20.3bn. Like-for-like sales excluding fuel increased 3.5% during the period.

The accounts cover the final full year of Asda’s ownership by US giant Walmart. The grocer has since been bought by petrol forecourt tycoons the Issa brothers and TDR Capital in a £6.8bn deal, which remains subject to final regulatory approval.

Asda paid dividends totalling almost £3bn to Walmart during 2020, the filing revealed. 

The grocer also provided an update on trading during the first quarter of 2021.

Like-for-likes excluding fuel jumped 7.3% in the three months to March 31, despite the impact of a third national lockdown. 

Clothing sales spiked 31% on a like-for-like basis compared with the same period the previous year, while general merchandise sales surged 39% amid strong demand for outdoor furniture, barbecues and garden accessories.  

Like-for-like food sales climbed 3.9% year on year, while online sales made through the Asda and George websites rocketed 88%. 

Asda’s outgoing chief executive Roger Burnley said: “We showed huge resilience last year in unprecedented circumstances and carried this momentum through the first quarter with strong like-for-like sales growth in many key categories, especially clothing and general merchandise.

“While the closure of non-essential retail during the first quarter helped stimulate demand, our constant focus on keeping prices low, providing great-quality products and developing in-store partnerships with market-leading consumer brands, such as B&Q, The Entertainer and Greggs, continues to resonate with customers.”

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