Best Easter on record helps Asda bounce back

Supermarket says revamp is starting to pay off as it records first quarterly sales rise for three years

ASDA has toasted its first increase in quarterly sales for three years on the back of a successful Easter, the return of inflation and early signs that its turnaround efforts are beginning to work.

The supermarket, which has suffered falling sales over the past 12 quarters, has eked out a positive result with sales rising by 1.8pc in the second quarter of the year.

It is a dramatic turnaround from the 7.5pc slump Asda posted this time last year, in what was the grocery chain’s worst result yet.

Sean Clarke, who took the reins from Andy Clarke last year, said that the supermarket had attracted 275,000 new customers during the period. But while he acknowledged that progress had been made, he struck a note of caution by saying, “we know we need to continue to up our game to be in the best shape possible”.

Asda said that it was buoyed by its most successful Easter on record, with total sales over the period jumping by 16pc. Stripping Easter out from the three months to June 30, total sales rose by 0.7pc.

During the quarter, food inflation rose to about 2.6pc, according to industry figures by Kantar, as shop prices increased to cover the rising costs of staple grocery items such as butter, fish and lamb. Doug Mcmillon, the Walmart boss, said that he was “encouraged that the UK delivered positive comparable sales”, and said that he had visited Asda in June to “see the progress being made”. He added: “Customers are responding to investments in price and store experience by visiting the stores more often and increasing their basket sizes. There’s still much more to be done, but we’re clearly headed in the right direction.”

Since moving from Walmart China to Asda, Mr Clarke has focused his revamp of the supermarket on targeted price reductions.

He has also culled the number of products on shelves by 25pc and introduced a “Farm Stores” value food brand to sharpen Asda’s competitiveness against Aldi and Lidl.

“For the past year, Asda has primarily been focused on fixing the basics under the tag-line ‘new reasons to shop at Asda’,” said Ray Gual of Kantar Retail.

The improved sales performance comes as the supermarket begins a consultation with more than 3,000 staff over possible redundancies or dramatically lower working hours at 18 underperforming shops.

The staffing changes follow a wider industry trend among retailers to overhaul their staffing costs in the face of increasing wages and a change in consumer shopping habits.

Earlier this month, Asda revealed its worst full-year results since it was taken over by Walmart in 1999, with profits tumbling by 19pc to £657.2m last year.

Meanwhile, Walmart reported a 2.1pc increase in total sales to $123.4bn (£95.9bn), helped by strong online growth in its US business.