2 weeks ago
Asda sales fall despite grocery market growth
Asda is a big supermarket in Britain.
Many people are buying more groceries this summer because of the warm weather.
But Asda is not selling more things; it is selling a little less.
Other supermarkets like Tesco, Sainsbury's, and Morrisons are selling more.
Asda is trying to make things cheaper to get customers back.
But making things cheaper means the company makes less money.
Asda also has a lot of debt from when it was bought a few years ago.
Its market share is a bit better than before, but it is still behind the biggest supermarkets.
Aldi is getting very close to Asda in size.
The boss, Allan Leighton, says the plan to cut prices is important.
It is not clear yet if cheaper prices will be enough to help Asda grow again.
Asda sales fell 0.2% in the 12 weeks to August 9, the only major UK grocer to decline.
The wider grocery market grew 2.7% over the same period.
Tesco sales rose 1.8%, Sainsbury's 3.5%, Morrisons 3.3%, Lidl 8.5%, Aldi 1.1%, and Ocado 13.1%.
Asda's market share edged up to 11.9% from 11.5% a year earlier, but it remains behind Tesco (27.8%) and Sainsbury's (15.1%).
Executive chairman Allan Leighton is pursuing an aggressive price-cutting strategy, warning of a 'material hit' on profits.
Asda's sales fell 3.4% last year, leading to a loss of almost £1 billion and a debt interest bill of £730 million.
- Who
- Asda, a major UK supermarket, and its executive chairman Allan Leighton, competing against Tesco, Sainsbury's, Morrisons, Lidl, Aldi, and Ocado.
- What
- Asda's sales fell 0.2% year-on-year in the 12 weeks to August 9, making it the only major UK grocer to decline while the wider market grew.
- Where
- United Kingdom.
- When
- In the 12 weeks to August 9, with the latest four-week period also referenced.
- Why
- Asda is struggling due to high debt costs, weaker profitability, and intense competition, despite an aggressive price-cutting strategy.
Price-cutting strategy supporters
Price-cutting strategy critics
Effectiveness of price cuts
Price-cutting strategy supporters
Aggressive price cuts will win shoppers back and improve Asda's position, as shown by slowing decline and improved market share.
Price-cutting strategy critics
Price cuts have not yet delivered a sales turnaround and will cause a 'material hit' to profits, potentially worsening the business.
Key facts
- Asda sales change
- -0.2% (12 weeks to August 9)
- Grocery market growth
- +2.7%
- Asda market share
- 11.9% (up from 11.5%)
- Tesco market share
- 27.8%
- Sainsbury's market share
- 15.1%
- Aldi market share
- 10.9%
- Asda last year sales change
- -3.4%
- Asda debt interest bill
- £730 million
Quotes
Allan Leighton
Executive chairman of Asda
“Leighton warned that lower prices would have a "material hit" on profits.”
easterneye.biz
Sources
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