Asda unveils its first quarter financial results and strategy update
- 3.9% fall in like-for-like sales for the 15 weeks to 19th April as research shows 83% of customers are saving for a rainy day over spending disposable income.
- CEO and President Andy Clarke remains committed to five year strategy and won’t knee-jerk at the expense of long term profitability.
- He describes 2015 as ‘Most challenging year yet’ for UK supermarkets, but reinforces that Asda business remains balanced, healthy and sustainable.
Asda today unveiled its first quarter financial results 2015, posting a 3.9% fall in like-for-like sales for the 15 weeks to 19th April in a quarter that has seen unprecedented moves in the supermarket industry.
Speaking at an event in London this morning, Asda President and CEO of Asda, Andy Clarke reiterated his commitment to the company’s five year strategy to redefine value retailing in a challenging market.
He stated that while there were signs of ‘real and sustainable economic recovery’ 2015 was proving to be the most challenging year yet for traditional supermarkets.
Joined by Chief Financial Officer Alex Russo, they spoke about the pace and scale of change in the market and customer behaviours, while highlighting a solid, balanced Asda business.
Clarke commented: “This last quarter has been unprecedented. We have seen deflation in the market and exponential shifts in the industry. Although I still believe that 18 months ago we did a great job of predicting changes, we could not have foreseen what’s happened to others and the moves they have had to make in order to restore their business – creating an impact on us in the short-term.
“Whilst I take no pride in reporting a negative number, we are in a period of expected turbulence, not distress. We won’t buy short term sales at the expense of long term profitability. Throughout this period of change in our sector, Asda has been first to market with its response.
“Fundamentally, Asda remains a balanced, healthy sustainable business with a clear direction allowing us to hold our nerve and remain focussed on delivering for our customers.”
Russo and Clarke highlighted successes and steps taken in the last quarter to deliver Asda’s five year strategy including:
- Commitment to customer service with a £21million investment in store hours
- Strong sales and profit momentum for George Home: operating margin +380bpsyear to date
- Increased convenience for customers with Click and Collect sites up 94% YoY to 611
- 10 of the 15 petrol station acquisitions opened, with all 15 due to launch by the end of July
- 21 Grocer own label awards
Andy Clarke also gave a preview of the near-future and announced the opening of the UK’s first intelligent Click and Collect pod, due to open in June on a major commuter belt in St Helen’s between Liverpool and Manchester; and the first London high street store trials to be opened by the end of this year in Deptford and Wealdstone.
The retailer also revealed new research into how the recession and economic downturn has had a long lasting impact on the spending and saving habits of consumers – 83% of them now saving any discretionary income, rather than spending it. And despite the latest Asda Income tracker showing the annual family is £16 a week better off than the same time last year, 43% say they feel like they have less money now than before the 2008 recession. A third of those who do feel like they have more money in their pockets are choosing to spend it on activities with the family.
Clarke concluded the update by commenting: “Despite signs of a real and sustainable economic recovery, 2015 is setting itself up to be the most challenging year yet for traditional supermarkets. Customers are not yet cash-confident, preferring to save rather than spend and, as expected, the market remains turbulent. Despite all this we remain a financially strong and balanced business, one which was first to market with our strategy. I’m fully committed to delivering long-term growth at Asda and focussing on giving customers what they want.”