PRESSURES

Asda traded a fall in profits for a recovery in sales in the UK’S cut-throat food retailing market in 2017 ahead of the Us-owned giant’s proposed £12 billion merger with Big Four rival Sainsbury’s.

Asda said the 0.5 per cent lift in same-floorspace sales last year was due to a decision to cut prices, a noticeable improvement in the 5.7 per cent drop in comparative sales in 2016.

Last month, the company reported its fourth consecutive quarter of sales growth, with a 1 per cent (Easter adjusted) rise in like-for-like sales during the first three months of 2018.

However, the move to ramp up the battle with the likes of Tesco, Morrisons and discounters Lidl and Aldi came at a price, with Asda’s operating profit sliding 13 per cent to £735.4 million from £845.3m in the previous year.

Despite the fightback on sales, Wal-mart-owned Asda saw its market share fall a further 0.3 per cent to 15.4 per cent. It makes the group the UK’S third biggest supermarket player, after Tesco and

0 The supermarket major revealed that profits were down 13% to £735.4m

ALEX RUSSO, CFO Sainsbury’s. More positively, Asda saw strong cashflow from operating activities of £1.29bn, and net cash inflow of £309m. The statutory accounts also confirm that Asda paid £128.4m in corporation tax last year.

If the Competition and Markets Authority (CMA) approves the merger of Sainsbury’s and Asda, the new entity will leapfrog Tesco to become the biggest player in the sector.

Asda’s chief executive Roger Burnley said: “Our 2017 accounts reflect a solid performance and a strong, well-managed business.

“During the year, momentum returned, driven by a series of planned investments in lowering price, further improving quality and innovation in our own brand ranges and providing an even better shopping experience whether in store or online. Our customers have responded well to this strategy and the momentum of 2017 has continued into the first quarter of 2018.”

In the strategic report,

“Customers remain cautious in their spending habits and we expect conditions to remain tough”