Asda given sales sales boost from lockdown but profits dip

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Asda given sales sales boost from lockdown but profits dip
Asda ramped up its online delivery operations from 450,000 weekly slots to over 725,000.
// Asda quarterly sales up 3.5% like-for-like and 2.7% net
// Average basket value surged 6.9% but number of transactions down 3.4%
// Parent company Walmart suggested that Asda’s bottom line had contracted

Asda received a boost in quarterly sales as shoppers stocked up and cleared shelves in the lead-up to March’s lockdown, the supermarket said.

Revealing its latest results, covering the three months to March 31, sales jumped 3.5 per cent on a like-for-like basis compared to the same period a year earlier, excluding fuel.

The Big 4 retailer said net sales was up 2.7 per cent year-on-year, and its average basket value spiked 6.9 per cent year-on-year due to a wave of stockpiling before lockdown – although the number of transactions fell 3.4 per cent.


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Parent company Walmart also highlighted how “higher growth in food and consumables” during the first quarter was “partially offset” by reduced demand in Asda’s George clothing arm.

While Walmart did not provide exact figures around Asda’s profitability for the quarter, it did say the Big 4 retailer’s bottom line was affected “primarily as a result of a change in mix towards lower-margin categories in response to Covid-19”.

Bosses added that shoppers remain cautious, with Asda’s latest income tracker finding household incomes fell 0.6 per cent in March – the first drop since 2017.

Nine out of 10 customers also said they were worried about a depression in the economy, Walmart said.

However, since the lockdown and Covid-19 crisis, Asda has undergone a complete overhaul.

It remains open to serve families while coping with staff being sick or self-isolating and a ramping up of online delivery operations from 450,000 weekly slots to over 725,000.

With online delivery slots sparse – prior to lockdown home delivery was less than 10 per cent of the market – the grocer said it received more than 3500 visits per minute during the week commencing March 18.

Despite a boost in food sales, with restaurants and cafes shut, bosses did point out there had been a fall in non-food sales such as clothes and homeware.

“Asda also noted a significant decline in demand for non-essential items, such as fashion, fuel and general merchandise and was required to close 33 of its Living Stores in March in response to government guidance on non-essential retail,” the retailer said.

Asda also saw its smaller stores, which are more centrally located, perform strongly as customers preferred to shop locally and avoid driving to out-of-town stores during the early weeks of lockdown.

Asda chief executive Roger Burnley said: “It has become increasingly clear that Covid-19 is set to be part of our lives for months to come and we know that customers have moved on from an initial worry about the virus, to more longer-term concerns about the implications of lockdown on their family, wellbeing and finances.

“And, as more people return to work, they are juggling the demands of cooking more and having less time to shop for groceries.

“Whilst safety is still a major focus for customers, three quarters tell us they are also increasingly concerned about the price of groceries and are looking for value – and we can reassure them that Asda will meet their needs on both.”

Burnley added that Asda was investing in longer-term measures, including “virtual queuing” at its Middleton store near its Leeds head office, where customers can book a time to visit a store.

Directional signage, barriers, perspex screens and access restrictions have all been rolled out, and Scan and Go mobile services are now in 581 stores to reduce contact.

The supermarket has also extended the capacity of its food box delivery service for vulnerable customers to 10,000 boxes per day, and is donating £5 million to FareShare and Trussell Trust.

Walmart finance chief Brett Biggs said: “As March and April progressed, we saw economic pressure, channel shift and mix shifts in most of our markets, with significant April sales declines at Flipkart, Africa and the UK, although the UK was mainly fuel related.”

with PA Wires

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