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Asda suffers worst sales performance since Walmart takeover

Asda sign

Asda has suffered its worst annual sales performance since its acquisition by Walmart, as a result of increased competition among British supermarkets.

Pre-tax profits for the group declined 19% to £791.7m, with revenues down 3.2% from £22.3bn to £21.6bn in the trading year to 31 December 2016.

Sales at the price-focused retailer have continued to slide, with customers migrating to German discounters Aldi and Lidl and Asda facing fierce competition from the other retailers in the 'Big Four'.

Among these four supermarkets, Asda posted the worst sales performance in 2016, and unlike some its rivals it has failed to bounce back in recent months. In May, Asda reported sales decreases for the 11th consecutive quarter.

Since taking over from Andy Clarke in June last year, Asda CEO Sean Clarke has tried to reverse the retailer’s bad fortunes through “strategic changes”, namely by dropping prices and trying to boost food quality and improve customer services.

But the latest figures show that Asda remains in a difficult situation financially as it struggles to compete in a volatile retail landscape.

In the company’s sales report, finance director Alex Russo, said: “Our sales performance, relative to the market, was behind our expectations. However, in the last quarter of 2016, we saw an improvement following the changes made to our ranges and investment in price and service.”

Tom Berry, a retail analyst at GlobalData, told the BBC: "Asda has been flailing without direction for too long, and a comprehensive plan is needed if it is to survive in the highly competitive UK grocery market.”

Source: Insight Team

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02 August 2017

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