Asda has posted a third consecutive quarter of sales growth but suffered a decline in profitability during its crucial Christmas trading period.
The Walmart-owned grocer said like-for-like sales excluding fuel climbed 0.5% during the 13 weeks to December 31, despite a 1.6% drop in shopper numbers year-on-year.
The US retail titan did not break out a profit figure for Asda, but said operating income decreased during the quarter.
Walmart attributed the fall to “ongoing price investments” as the supermarket giant bids to close the gap with Aldi and Lidl.
Asda’s parent company hailed “improved in-store service scores” during the festive period and said the performance of its online business and private label lines “strengthened” compared to previous quarters.
‘Colleagues should be proud’
Asda boss Roger Burnley, who took the reins last month, said: “Our colleagues should be proud of this performance, which is testament to their hard work during the all-important Christmas trading period.
“Last year, we really improved our offer for customers – combining great product innovation with a focus on value and an easy shopping experience.”
He added: “Moving into 2018 we remain absolutely focused on doing the right things for our customers to accelerate our momentum and build trust, be that through an increased focus on every day low prices with the launch of ‘Rolled Back Staying Back’, continued innovation in our own brands, the way we make it easier for customers to shop with us or the way we support our communities.”
Walmart chief executive Doug McMillon added he was “encouraged by recent results” but warned: “We know we have more work to do in the UK”.
In the summer, Asda posted its first quarterly sales rise for three years, as like-for-likes climbed 1.8% in the 13 weeks to July 28, ending a run of sales decay stretching back 11 consecutive quarters.
It followed that up with a 1.1% uplift during the 12 weeks to September 30 – and claimed in an internal memo to staff that like-for-likes jumped 5.3% during the crucial Christmas trading period, although it did not specify over what period those sales were achieved.
New boss Burnley, who officially succeeded Sean Clarke at the helm on January 1, has wasted no time in making his mark on the business as he bids to build momentum.
The former Sainsbury’s executive has already reshaped his senior management team, including drafting in a strategy boss from parent company Walmart.
As reported by Retail Week back in November, Preyash Thakrar, the former boss of strategy and real estate at Walmart Canada, has joined Asda as chief strategy officer.
Burnley also promoted Anthony Hemmerdinger, vice-president of retail south, to the role of senior vice-president, retail operations director, and appointed ex-Carrefour executive Jesús Lorente as its new chief merchandising officer.
The changes come as Asda ramps up its turnaround efforts amid a fiercely competitive grocery market.
The supermarket giant has focused its efforts on cutting prices, enhancing product quality and availability, and improving customer service in a bid to woo shoppers back from discount duo Aldi and Lidl.
But it is also pressing ahead with plans to restructure and streamline its operations in the midst of rising costs, such as the national living wage, the apprenticeship levy and ballooning business rates.
Last September, Asda revealed it was swinging the axe on 300 roles across central operations at Asda House in Leeds and George House in Leicester.
And in December, the grocer said that more than 800 section leader roles would be stripped out of stores as it simplified store management structures.