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Asda Q2 like-for-likes up 0.5%, but operating income declined due to Netto acquisition

Asda has reported like-for-like sales up 0.5% excluding VAT in its second quarter from April 1 to June 30.

Walmart International chief executive Doug McMillon told analysts that Asda had “a solid second quarter, growing sales, excluding fuel, ahead of last year”.

However, he said: “Operating income declined due to $31m of costs related to Netto. Adjusting for fuel sales and Netto, Asda grew operating income faster than sales. In the second quarter of this year, comparable sales, excluding fuel, increased 50 basis points. Traffic decreased by 120 basis points and average ticket increased 170 basis points.”

He added: “Customers are consolidating their trips in the face of high fuel prices. Asda grew expenses slower than sales in the second quarter, leveraging on tight expense management. After excluding the Netto costs, Asda’s expenses declined from last year.”

Asda reported like-for-like sales up 0.8% in its first quarter.

Walmart has reported net sales growth of 16.2% in its international division to $30bn, which includes Asda, in its second quarter.

For the three months to July 31, operating income for the international division was up 8.9% to $1.4bn.

McMillon said: “Economic indicators suggest that 2011 will remain a challenging year for our U.K. consumers, and we’re confident that Asda and its Netto store conversions are entering the second half of the year with good momentum, delivering availability and every day low prices.”

Walmart chief executive Mike Duke said: “Walmart International reported second quarter net sales growth of more than 16% over last year to $30bn. I’m pleased that we’ve made so much progress on integrating the acquisitions of the Netto stores in the UK and Massmart in sub-Saharan Africa. We look forward to the many opportunities we have in Africa to create jobs and help customers save money and live better.”

Yesterday, Asda laid out plans for 250 smaller supermarkets, and today said it would create 7,000 Christmas jobs as part of a push on customer service.

Source : Jennifer Creevy – RetailWeek
www.retail-week.com/city/trading-update/asda-q2-like-for-likes-up-05-but-operating-income-declined-due-to-netto-acquisition/5028217.article

16 August 2011
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