Wednesday, September 20, 2017

Asda reaches new “nadir” as Andy Clarke plans price cuts


Asda posted its worst ever results today, unfortunately justifying the cautious pessimism of CEO Andy Clarke.

“I don’t think when the numbers are released in January you are going to see many [retail bosses] with a big smile of joy,” Clarke said in December.

He may have been speaking too soon. The festive period brought like-for-like sales growth for each member of the Big Four, aside from Asda, which saw a 5.8% slide in sales in the last quarter of 2015.

Clarke admitted the results were “not what we had forecast.”

Following the release of Asda’s Q2 sales results last year, Clarke claimed the chain had reached its “nadir”. Five months on a new low point has been reached, and the supermarket chain has even entered talks with suppliers on cutting costs.

“We have identified what we have to do to reposition the business to recover sales and have already taken decisive action,” Clarke said.

He said the results were “commendably stable” considering the “significant and permanent structural change” going on in the UK retail market. No major supermarkets have been left unfazed by these changes, the most prominent being the consistent and rising success of discounters Aldi and Lidl.

Clarke also took the opportunity to list the price reductions Asda has managed in recent months, in addition to plans to streamline product ranges and restructure its Leeds office in order to cut costs. Very recently Asda announced a £500m investment into slashing prices relative to the discount chains.

“Asda’s now prolonged story of negative [sales growth] shows that it has not done enough to broaden its appeal beyond price,” said George Scott, a Senior Analyst at Verdict Retail.

“Away from price, Asda has a relatively weak reputation for quality… it also needs to do more to improve its staffing levels, adding reasons to visit, if it is to claw back ground from the discounters.”


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