Most businesses would say that performance is more important than PR spin, but this afternoon the formidable Asda PR machine is in full flow after the Walmart Q2 sales figures were published in the US, as Asda is “never knowingly under-promoted”.

Most businesses would say that performance is more important than PR spin, but this afternoon the formidable Asda PR machine is in full flow after the Walmart Q2 sales figures were published in the US, as Asda is “never knowingly under-promoted”.

It’s hard to say where this relentlessly positive approach comes from, as the likes of former Asda boss Andy Bond and chief executive Andy Clarke seem relatively laid-back characters, but it is very “American”. It is, no doubt, not a coincidence that Asda has an American parent, although the tone of Walmart’s own statements is quite restrained.

Clearly, it’s not easy for Asda, which was a PLC before 1999, being a minor offshoot of the international division of Walmart and being constrained by its reporting and disclosure standards. But it can sometimes be an advantage that Asda doesn’t have to report to the City every quarter on the minutiae of its profit performance and can carry on “getting its message across” without too much scrutiny.

And Asda isn’t the only big food retailer with a big PR department, as Sainsbury’s and Tesco are certainly no slouches when it comes to emphasising the positive. The obvious exception is local rival Morrisons, which seems to take a “gruff Yorkshireman” approach that their results will speak for themselves over time and doesn’t therefore try to hype things in the short term.

To be fair, it’s not all one-way traffic with Asda, as it gives a lot back, via the useful surveys which it sponsors and makes available: the ‘Income Tracker’ produced by CEBR and the ‘Mumdex’. And, to its credit, it has been well to the fore in the growing development of social media, via online blogs, Twitter feeds and so on.   

But ultimately Asda will be judged on its performance, the substance beneath all the spin. In Q1, it boasted of “market-leading growth”, with like-for-like sales up by 2.2%, ex-VAT and ex-petrol, but in Q2 (the three months to end of June) that measure slipped to +0.7%, although Clarke trumpets “I’m really proud of our performance again this quarter”. Total sales grew by only 3.2% in Q2, helped by 22% online growth and by the boost from the Netto store conversions last summer, but boasting about top-line growth from acquisitions is a bit of a short-term game, just as Asda’s forecast in April 2010 of having 100 Asda Living stores has fallen into some disrepute.

There are signs, however, that Asda’s profit performance is improving, despite the tough marketplace and poor seasonal weather conditions, as it says that Q2 gross margin increased slightly from last year due to strong non-food stock control and that Q2 operating costs grew slower than sales due to improved process efficiency. The operating metrics are moving in the right direction there, although there is a long way to go.

There is also a long way to go with the oft-expressed desire of Asda to be known for quality food, as well as cheap food. The likes of Waitrose and Marks & Spencer won’t be losing any sleep over this, but it was no coincidence that today’s press briefing was held in the upmarket West London surroundings of Leiths School of Food and Wine, Asda’s partner in developing its “Extra Special” food range.

About Nick Bubb

Nick Bubb has been a leading retailing analyst for over 30 years. He is a well-known commentator on UK retailing and is a founder member of the influential KPMG/Ipsos “Retail Think-Tank”.