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Asda sales flat & operating income down in Q2

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Asda, the UK’s second largest supermarket, has reported a 0.5 per cent rise in like-for-like sales for the three months ending June 30th 2011 in results published today.

Conversions of smaller stores purchased by the retailer from now defunct Netto dented profits during the quarter however and operating income was down overall year-on-year due to the $31 million (£18.9 million) cost of this refurbishment work.

High commodity prices have hit trading in the UK however total net sales for parent company Walmart reached $108.6 billion during the quarter, representing an increase of 5.5 per cent compared to last year.

Doug McMillon, Walmart President & CEO, described Asda’s performance over the quarter as “solid”, and claimed that despite family budgets being squeezed on this side of the Atlantic the supermarket managed to improve efficiency over the period.

“Customers are consolidating their trips in the face of high fuel prices,” McMillon commented.

“Asda grew expenses slower than sales in the second quarter, leveraging on tight expense management. After excluding the Netto costs, Asda’s expenses declined from last year.

“Adjusting for fuel sales and Netto, Asda grew operating income faster than sales. In the second quarter of this year, comparable sales, excluding fuel, increased 50 basis points. Traffic decreased by 120 basis points and average ticket increased 170 basis points.”

Of the 147 Netto stores acquired by the supermarket 61 have now been fully converted to the Asda Supermarket branding, significantly expanding its smaller store portfolio.

Another notable achievement during the period was the 250,000 recorded basket check through the grocer’s price back guarantee scheme.

All of the main supermarkets in this country are showing little growth at present and so to keep sales increasing, if only just, will be seen as a steady performance by Asda at the present time.

McMillon added: “Economic indicators suggest that 2011 will remain a challenging year for our U.K. consumers, and we’re confident that Asda and its Netto store conversions are entering the second half of the year with good momentum, delivering availability and every day low prices

Published on Tuesday 16 August by Editorial Assistant

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