Asda draws a line under three years of sales pain and drift

Comment Martin Flanagan

More evidence of a high street squeeze emerged yesterday, with the latest official figures showing only a lukewarm rise in sales in July.

But one retailer with grounds for some cautious optimism is supermarket giant Asda. As Tesco and Morrisons have shown definite evidence of progress, and Sainsbury’s has also seemed to be gingerly getting its act together – helped by its acquisition of Argos – Asda had previously been trailing the field in recovery.

But the group might have just seen some light at the end of the tunnel. The retailer, owned by Walmart of the US, has reported its first quarterly like-for-like sales growth in three years.

Group chief executive Sean Clarke, who took over from namesake Andy Clarke a little over a year ago, deserves some congratulations.

Admittedly, Asda benefited from a bumper Easter, and if you stripped out that period then its sales were a more pedestrian 0.7 per cent higher. But you have got to stop the rot before you can make strides, and the Asda boss will be breathing a sigh of relief that his major price reductions and attempts to spruce up the service offering is bearing fruit.

The ones who may be feeling just a tad nervous now are the discounters Aldi and Lidl. It is their depredations of market share that have undermined the Big Four in recent years, that and austerity-battered shoppers reining in their food shop.

But arguably Tesco, Morrisons, Sainsbury’s and now Asda, have regained some trading ballast. One of the key components seems to be a tacit acceptance by the Big Four that they will have to weather some profit margin squeeze if they are to regain the high ground of sales and mark a line in the sand to stop the discounter plunderings.

It is too early to say this will succeed. But like-for-like sales growth seems back on the agenda among the big boys now, having done most of their various restructurings.