Asda sales slump despite ‘not doing much wrong’

By Michael Stones contact

- Last updated on GMT

Hitting bottom: Asda boss Andy Clarke said the retailer had reached its 'nadir'
Hitting bottom: Asda boss Andy Clarke said the retailer had reached its 'nadir'

Related tags: Asda, Supermarket

Asda has not “done much wrong”, despite posting its worst sales performance in its 50-year history, according to leading City analyst Shore Capital.

Britain’s third largest supermarket unveiled sales at established stores down by 4.7% in second quarter results for the three months to June 30.

UK sales were reported to have fallen in dollar terms by 5.2%, while traffic or footfall fell by 3.3% and basket size by 1.9%, revealed Asda’s US owners Wal-Mart.

Asda boss Andy Clarke claimed the retailer had reached its “nadir”,​ while acknowledging the retailer’s disappointing second quarter performance.

‘Worst storm in retail history’

The retailer’s ceo and president Clarke, who has pledged to remain at the helm for at least the next three years said: “We continue to navigate a steady course through the worst storm in retail history, despite another challenging quarter.

“Predicting that 2015 was going to be a volatile year, I didn’t expect to report a positive sales figure, but I’m not distracted by the short-term picture. We have an enviably stable business with balanced books and the right strategy to return us to sales growth.”

Shore Capital analysts Clive Black and Darren Shirley commented: “Asda hasn't done much wrong in our view, but the shoppers don’t think that way.

“We have written before that we have been somewhat surprised by the magnitude of Asda’s under-performance in 2015 and, indeed, we continue to scratch our heads on this matter given the magnitude of sales weakness recorded today​ [August 18]; we cannot remember such weak same-store sales from the group in recent times.”

‘Genuinely innovative in the online space’

Asda was “executing reasonably well”,​ with store standards, availability and service counters, said the analysts. “The business has a pretty robust price value quotient and it has been investing in the still growing online grocery channel. Indeed, Asda has been genuinely innovative in the online space.”

But the competitive dynamics of the grocery sector were working against Asda’s favour. The limited assortment discounters were continuing to take share, both through like-for-like sales and particularly new stores, and Asda faced sharp competition from superstore competitors Tesco and Morrisons, while Sainsbury remained “a dogged competitor”.

Nevertheless, with management continuing to focus on a simple and straightforward business, with lower costs, fewer gimmicks and a more accessible “arguably honest”​, approach to grocery retailing, Asda was “most certainly is not going away!”​, concluded Shore Capital.

Shore Capital retained its neutral stance on the stock of UK supermarkets.

Meanwhile, supermarket rival Sainsbury recently overtook Asda for the title of Britain’s second largest supermarket after Tesco, according to Kantar figure.

Related news

Show more

3 comments

Don't blame the Asda staff

Posted by James Fleming,

I used to work at Asda so don't blame the staff ! Asda had a massive restructure October 2014 where they made good managers redundent and kept the rubbish managers and put them on less money. The managers the did get rid of where replaced with younger cheaper section leaders. They where also going to recruit more Asda shop floor staff as well to replenish the shelves but this has simply not happened. Most of the good staff have become so fed up with Asda they have now left the company.

Asda store's are woefully understaffed so no wonder there are no products on the shelves, no products, no choice . . . customers will go somewhere, else its not rocket science to come to the conclusions that have been published above. I worked there christmas last year and a quater of the fresh food that came in on delivery went straight into the bin! Some of it never even made it onto the shop floor as there was simply not enough people to put it out on the shelves.

Report abuse

Laughable Article

Posted by Ray,

Has the author actually visited an ASDA store recently - my experiences in Ipswich have gone downhill fast.

Lots of staff picking online orders rushing around - its a shame that us actual customers keep on getting in the way. It's also a shame that they don't bother to refill empty shelves - so the most popular 'offer' items are rarely available. Or is this a strategy to get more profit via higher priced items?

It's a really negative experience - compared to Lidl in particular.

And now the bag fiasco - using the self service checkout I have to ask a member of staff for a carrier (because I might steal them!!!), and who insists on scanning them through with me - and to add insult to injury the till demands I pay for carriers again at the end of my shop. A total fiasco.

Whoever designed this system couldn't organise a ........ in a brewery.

So no, of course they're not doing anything wrong. Can't understand the ongoing slide in sales.......

Report abuse

General Manager

Posted by L.B.Lynn,

Perhaps if Asda fully stocked all the shelves, with the correct and in date products, perhaps customers would buy the items they need. The store in Shipley West Yorks has gone seriously downhill over the past 2 years, with major stock outs, and very late deliveries on a daily basis. Continual shopfloor staff changes result in a lack of product knowledge and an inability to service the customers. No wonder the discounters are taking market share and when Morrisons opens in Shipley, Asda may as well shut up shop as all customer confidence has been lost.

Report abuse

Follow us

Products

View more

Webinars