Asda expects tough market conditions to continue as it posts first quarter sales
- Like for like sales, excluding fuel and VAT, down 0.3 per cent, total sales growth in low single digits for Q1 (to 31st March 2010)
- Profits grow ahead of sales beating internal targets
- Store unveils £12m investment in front line services to reduce queues and assist customers
- 300 new jobs set to be created at new home shopping centre in North London
- 15,600 colleagues set to pocket £47m – biggest ever Walmart sharesave payout
Asda announced today (Tuesday 18th May 2010) that comp sales, without fuel, were down 0.3 per cent in the first quarter (up to 31st March 2010), while total sales grew in the low single digits. Profits for the same period grew ahead of sales, beating internal targets.
Last month, at an analyst meeting held in Leeds, Asda unveiled its five-year strategy setting out two clear aspirations – to be the market leader in general merchandise and clear number two for food. Asda’s management team also outlined how Asda will become an even better food retailer, a broader non-food retailer and a leader in e-commerce.
Commenting on today’s results, Andy Bond, chairman of the Asda executive committee said: “As we’ve already said, by our own high standards, our first quarter sales were disappointing. The market has slowed down significantly since the turn of the year, and I expect conditions to remain tough for some time.
“I’m pleased to say that we’re making good progress against the plans we outlined to analysts last month. Our four pronged strategy to build sales and broaden our appeal is beginning to take shape.
“On Price our renewed focus on EDLP means we’ve successfully reduced the number of promotions in store. The launch of the Asda Price Guarantee also means both our price position, and price perception has never been stronger.
“On Quality we have extended the 100 Day Guarantee to the entire George range, and have innovative plans to extend this approach to other areas of the business. Our own label food also continues to win more awards than our major rivals.
“On Service we’re investing heavily to reduce queues and improve the customer experience. And on Range there are some exciting developments coming in the second half of the year.”
On a recorded conference call to analysts today, Doug McMillon, President & CEO Walmart International said: “ASDA has recently made good progress towards their strategic goals. I am confident that our strong leadership team, led by Andy Clarke, will continue this progress and deliver positive sales momentum for the remainder of the year.”
Andy Clarke, Asda CEO and President added: “Listening to customers, it’s clearer than ever that the second half of this year will be challenging for them. High petrol prices, and the prospect of tax increases from the incoming government are weighing heavily on their minds. It is our responsibility to deliver the plan we’ve laid out, and by doing so help lower the cost of living for our customers.”
To help broaden its appeal Asda unveiled today it has invested £12m in front line services to assist customers in store and reduce queues. Nearly half the money invested has enabled stores to employ colleagues who are specifically tasked with speeding up service at the tills. Every core Asda store also has a ‘front of house’ customer service host who both greets customers entering the store, and takes them to products they cannot find.
In addition Asda is set to extend its online capacity in N London by around 50 per cent following the exchange of contracts on a second home shopping picking centre, located in Enfield. The centre, due to open in mid-August, will serve thousands of homes within a 45 minute catchment area, creating 300 new jobs.
Earlier today Asda announced that 15,600 existing Asda colleagues are set to pocket an estimated £47m* following the maturity of a three year Walmart sharesave scheme. The estimated payout is equivalent to £15 profit per share, a 90 per cent increase on each colleague’s savings.