Asda’s turnaround continues with second consecutive quarter of sales growth

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Asda update

Asda’s turnaround efforts has continued to bear fruit after it reported its second consecutive quarter of like-for-like sales growth.

The Big 4 grocer today posted like-for-like sales growth of 1.1 per cent for the 12 weeks ending September 30, while overall net sales climbed 3.6 per cent.

The results also marked Asda’s fifth consecutive quarter of continued sales improvement.

The parent company of the the Leeds-based retailer, US retail giant Walmart, attributed the results to increased basket sizes, and an improved value proposition, in-store service and online offer.

“In the UK, Asda delivered positive comp sales again this quarter,” Walmart president and chief executive Doug McMillon said.

“The improvements in store experience and price investments are increasing store basket sizes.”

Walmart chief financial officer Brett Biggs added: “Customers continue to respond to investments in the value proposition.

“In fact, during the quarter, our in store service metrics continued to improve and performance strengthened across our private brand and online grocery offerings.

“While we are pleased with the improved performance in the business we know we have more work to do.”

While a profit figure was not provided, Walmart said Asda’s gross profit rate declined, mostly because of commodity price headwinds and ongoing price investments.

In its last trading update, Asda said a turnaround scheme that consisted of price cuts and store improvements helped it achieve its first rise in quarterly like-for-like sales in three years.

Despite ending a slump that lasted 11 consecutive quarters, the Big 4 grocer was still seeking to cut costs at the time – which included hundreds of redundancies and scores of store closures announced in September.

The retailer has struggled to keep its head above water amid increasing pressure from discounters Aldi and Lidl and larger rivals solidifying their offering with convenience and supplier acquisitions.

A return to shop price inflation following the depreciation of the pound and the appointment of Sean Clarke as chief executive last year have so far shown marginal signs of improvement for Asda, and analysts expect this trend to continue.

However, last month Asda announced that chief operating officer Roger Burnley was set to be promoted and will replace Clarke in the new year.

“We’re excited to have Roger Burnley lead Asda into the future as CEO starting next year,” McMillon said.

“Over the past year, Roger has been our COO and deputy CEO and he has a long and distinguished retail career.

“I’d like to thank Sean Clarke for the tremendous work that he has done over the past year to stabilise the business and position it for growth.

“Sean has done a lot for our company living in five countries over his 21-year career with Walmart.”

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