Asda be getting better as prices fall

● Sales rise 0.5% last year after 5.7% slide in 2016, but profits down again

Asda’s finance chief Alex Russo said the business was facing a “challenging” consumer environment, and that discretionary income marginally fell during 2017.

Russo said: “Customers remain cautious in their spending habits and we expect conditions to remain tough for our customers, with price being a key consideration.”

Over the year, Asda opened three superstores, five supermarkets and a centre for serving online deliveries. Sainsbury’s chief executive Mike Coupe has said the merger withasdawillproduce£500m in cost savings. He has pledged consumers will get cheaper everyday items, although it is not yet known where the price cuts will fall.

Supermarket industry analysts believe Sainsbury’s/asda will be forced by the CMA to shed scores of stores to rivals as the price of getting the transaction through.

Asda has also been axing jobs in the UK, announcing in January that 28 roles will go at its head office on top of 300 job losses revealed in September as part of a major cost-cutting drive.

One analyst said yesterday: “Asda has bitten the bullet on price cuts, but is not out of the woods. It will be hoping the CMA gives the Sainsbury tie-up the nod.”