Gifts Today magazine

Asda profits surpass £1bn mark despite falling sales and market share

Asda’s operating profits increased 1.9% to £1.012bn last year despite falling like-for-like sales and declining market share, reports Retail Week.

The supermarket giant said that group revenues dipped 0.4% to £23.2bn following a 1% drop in like-for-like sales in the year ending 31 December 2014. Its market share fell by 0.1% to 17.1% in the 52 weeks to 4 January 2015, according to Kantar data.

Asda’s increase in profits was revealed just 24 hours after big four rival Tesco reported a 55% slump in its operating profits for the 26 weeks ending August 29.

The grocer said that “the external environment continued to be challenging” during the year but said it continued to attract customers by “maintaining our price leadership over our supermarket peers”. It said it invested £300m in price during the year on “everyday essentials” including bread, butter and milk.

Asda, along with Tesco, Sainsbury’s and Morrisons, has had to invest heavily in price to keep the resurgent discounters Aldi and Lidl at bay as the duo continues to grow market share in the UK.

The big four have also come under increasing pressure from food price deflation and changing shopper habits.

Asda moved to combat the latter by rolling out click-and-collect services to a total of 590 stores by the year end, representing a year-on-year increase of 97% in the number of locations.

In documents filed at Companies House, Asda added that it opened 17 new stores during 2014 – 11 superstores, five supermarkets and one standalone petrol station site. The stores added a combined total of 510,000 sq ft of new space.

Asda said it piloted “a new proposition” in two of its larger sites, creating “scalable destination stores” to reflect changing shopper habits. It admitted its success would “depend on satisfying changing customer needs more effectively than the competition.”

In August, Asda boss Andy Clarke insisted the embattled supermarket giant was now on an upward curve after hitting its “nadir.”

The grocer reported its worst quarterly sales slump in its 50-year history as like-for-likes plunged 4.7% in the 11 weeks to June 30 following a period of “unprecedented change” in the sector.

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