(Nov 13): Asda avoided a quarterly drop in sales for the first time in more than two years — though just barely — as the struggling grocer drew more shoppers online with the help of its loyalty programme.
Comparable sales excluding fuel edged up 0.1% in the 13 weeks to Sept 30, the UK’s third-largest supermarket chain said on Friday, snapping a run of nine consecutive quarters of declines. Online grocery sales rose 6.9%.
The results will offer some encouragement as new chief executive officer David Potts, who was appointed last week, tries to revive a business that’s lost market share since it was acquired in a highly leveraged buyout in 2021.
Asda faces a highly competitive UK grocery market in which the likes of Tesco plc, J Sainsbury plc, and German discounters Aldi and Lidl have eaten into its customer base. Its market share is 11.3%, according to the latest data from market tracker Worldpanel by Numerator, down from 14.3% at the start of 2021.
That was the year Asda was acquired from Walmart Inc by British billionaire brothers Mohsin and Zuber Issa alongside private equity firm TDR Capital, which has since become the majority shareholder.
Asda’s debt burden since that deal hindered turnaround efforts, as did a botched IT overhaul related to the separation from Walmart’s systems.
The supermarket chain said its revamped Asda Rewards programme helped attract online customers. Rivals Tesco, with its Clubcard, and Sainsbury’s Nectar programme have seen a significant uptick in users in recent years.
Asda said it would focus on offering customers value for money at a time UK household budgets are under pressure from higher prices and mortgage costs.
The latest Asda Income Tracker, a measure of affordability, showed spending power at a six-month low and the lowest-earning households facing an average £76 (RM410.65) shortfall on essential bills.
Intense competition in the grocery industry has led to recent speculation about consolidation. Asda was the target of a takeover bid by Sainsbury’s that was blocked by regulators in 2019 over concerns it would lead to higher prices and reduced competition.
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