Supermarket chain Asda saw profits rise six per cent last year despite making a substantial loss following its acquisition of Netto stores, it has been announced.
Asda’s acquisition of former Netto stores for £752 million was cleared by the Office of Fair Trading two years ago though the move has damaged its position in the increasingly competitive grocery market, as a result of long-running refurbishments to the stores purchased.
In its accounts, the grocer revealed that former Netto stores incurred an operating loss of £31.4 million on sales of £416 million.
Last month, data analysts Kantar Worldpanel revealed that Asda saw growth of 4.5 per cent in the in the 12 weeks ending September 2nd 2012 though noted that this is expected to decrease as its Netto acquisition effects year-on-year comparisons.
A spokesperson for the grocer told The Guardian: “The Netto stores did incur a loss during the first year of acquisition, however these losses were planned and reflected the costs of the integration and conversion costs.
“The stores actually traded ahead of expectations.”
In its last trading update which detailed the financials of its second quarter, Asda reported a like-for-like sales increase of 0.7 per cent and noted that its ‘real value’ strategy is proving fruitful, allowing the sustainable growth of the UK’s second largest supermarket.
However, at the end of last month the chain’s website was hit by a computer glitch which saw customers claim food vouchers worth thousands of pounds as Asda’s Price Guarantee, allowing shoppers to receive money-off vouchers if their weekly shop was more expensive at Asda than at its main rivals, backfired and allowed customers to cheat the system.
In the coming months, Asda is to step up the competition against rival Morrisons, which recently announced plans to launch its multichannel offering with a Morrisons Cellar wine range in the second half, as it launches a new alcohol product range having teamed up with Leiths School of Food and Wine in London.