New nadir as Asda sales plummet - Sainsbury’s takes No2 slot

Picture: PA
Picture: PA
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ASDA revealed further trading woes after it posted another hefty drop in sales as figures also confirmed it has lost its position as Britain’s second biggest supermarket to rival Sainsbury’s.

The Leeds-based chain, which is owned by US retail giant Walmart, said like-for-like sales fell 4.5% in the 13 weeks to September 30, which comes after a 4.7% fall seen in the group’s second quarter - its worst ever quarterly sales slide, described at the time by Asda boss Andy Clarke as the group’s “nadir”.

Mr Clarke said the latest sales decline came in “another challenging” quarter for the group, but put faith in his recently-announced turnaround plan - dubbed Project Renewal - to bolster trading.

The quarterly figures come as industry data from Kantar Worldpanel also showed market share losses have seen Asda overtaken by Sainsbury’s, slipping back into third position with the biggest sales fall of the Big Four players in the last 12 weeks.

Infographic: Aldi and Lidl take 10 per cent of UK grocery market

Mr Clarke said: “There’s no doubt this represents another challenging quarter.

“Sales volumes remain under pressure from price deflation and the intensely competitive background remains throughout the food sector.”

But he added the group has the “financial strength and clear plan to sustain us through this period”.

Asda’s 18-month overhaul - announced last month - will see it slow store expansion in London, ease up on plans to build more stand-alone petrol stations across the UK and scale back the roll out of its ‘’click and collect’’ scheme as it seeks to cut costs.

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However, it will speed up investment to revamp 95 of its largest stores and spend more money on offering customers lower prices in an attempt to take on the discounters.

It will also permanently close its business to business sales operation, which focused on selling direct to other businesses, in the next few months.

On reporting the group’s third quarter figures, Mr Clarke said despite being a “slow and costly” process to overhaul the business, it was a “logical and necessary adjustment of our existing strategy, to better address the immediate challenges and permanent changes the market is facing”.

Asda is battling against tough supermarket trading conditions as the rise of discounters Aldi and Lidl have sparked a fierce supermarket price war and stolen market share from the major players.

The Kantar figures show that Aldi and Lidl now control 10% of the grocery market, having doubled their share in the last three years alone.

The data makes for painful reading for Asda, which saw its market share drop to 16.4% in the 12 weeks to November 8 from 17.1% a year earlier.

Sainsbury’s was the only chain to see its share increase as it continues to put in a robust performance, rising to 16.6% from 16.4% a year earlier - the first share gain registered by any of the Big Four retailers since October 2014.

And as the food-focused retailer traditionally increases its market share over Christmas, it is expected to keep hold of second place for the time being, according to Kantar.

Kantar retail insight head Fraser McKevitt said: “Sainsbury’s has seen its fourth consecutive period of growth, flying in the face of tough market conditions,” he said.

Tesco saw its share slip to 27.9% from 28.7% a year ago, with Morrisons also sliding to 10.8% from 11.1%.

But all of the major supermarkets are under pressure, as separate data from analysts Nielsen highlights, showing the 10 biggest players - excluding Aldi and Lidl - saw their worst performance for more than a year, suffering a 1.2% drop in sales during the four weeks to November 7.

By contrast, discounters Lidl and Aldi continue to enjoy strong sales growth and eat into the established players’ dominance.

Mr McKevitt said the pair had attracted one million additional shoppers in the last 12 weeks compared with the same time last year.

Average spend per trip has also increased by 4% to £18.85, which is 78p ahead of the total retailer average, he added.

He said: “The discounters show no sign of stopping and, with plans to open hundreds of stores between them, they will noticeably widen their reach to the British population.”

Aldi now has a 5.6% share of the market, up from 4.8% a year earlier, with Lidl enjoying a 4.4% share, up from 3.7%, according to Kantar.

Figures also posted for Asda owner Walmart showed a drop in quarterly operating income to 5.7 billion US dollars (£3.7 billion), from 6.3 billion US dollars (£4.1 billion) a year earlier.

This came as difficult trading in its overseas operations - including the UK - left international sales 11.4% lower, offsetting a better performance from its US division, where same store sales rose 1.5%, marking the fifth straight quarterly increase.

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