Worst sales fall in Asda’s history

PRESSURE on the boss of Asda mounted yesterday after he delivered the supermarket chain’s biggest ever fall in sales.

Andy Clarke, president and chief executive of the Wal-Mart- owned business, said sales for the final three months of last year tumbled 5.8pc.

It was the weakest performance of all the ‘big four’ UK grocers over the crucial Christmas trading period and the worst in Asda’s history.

Tesco, Sainsbury’s, Morrisons and Asda have all suffered at the hands of discount rivals Aldi and Lidl – but none more so than Asda.

The latest slump in sales was the sixth quarterly decline in a row and Clarke admitted that there may be no growth for another year. Sales across the whole of 2015 were down 4.7pc.

Some analysts believe time could be running out for Clarke, who is the longest- serving chief executive among the big four following management shake-ups at Tesco, Sainsbury’s and Morrisons.

George Scott, senior analyst at Verdict Retail, said: ‘Clarke is under a lot of pressure. His vision and strategy isn’t working. Asda is addicted to price. But it needs to invest in quality and service not just price.’

Asda has poached Sainsbury’s retail and operations director Roger Burnley to become Asda’s new chief operating officer – sparking speculation he could eventually succeed Clarke. Burnley, who is expected to join Asda later this year, and Clarke have worked together at Asda previously as well as at fashion chain Matalan.

In a sign of trouble on both sides of the Atlantic, US parent Wal-Mart reported falling profits with net income for the fourth quarter down 7.9pc to £3.18bn.

The weak quarter in the UK was an embarrassing reminder of comments Clarke made last year when he described a 4.7pc fall in its second quarter last year as its ‘nadir’.

Despite the slump at Asda, Clarke said he had not been given any deadline to turn things around and said he was backed by his bosses in the US.

He added: ‘ Wal-Mart is very supportive. They understand market share is the issue.’

Clarke was also defiant in the face of criticism.

He acknowledged the quarter was ‘softer’ than he had predicted and that the market was ‘ challenging’ but he stuck by his strategy of everyday low prices.

He highlighted how the company had ‘stable returns’ and had not chased promotions to drive sales at the expense of profit.

He added: ‘We are a business that is in financial control not a business in crisis.’

Asda’s strategy of protecting profit over sales also meant it lost out on sales growth over Black Friday last year and on sales of alcohol on promotion which rivals, such as Morrisons, had benefited from.

Clarke’s strategy includes an extra £500m ‘price investment’ to keep more products at ‘everyday low prices’ in addition to the £ 1bn already announced as part of a five-year plan.

A new marketing campaign called ‘Pocket More’ was launched which includes 1,600 lines that are cheaper compared with Tesco, Sainsbury’s and Morrisons. It is also culling costs by shrinking its head office staff and reorganising its store staff.

Clarke said it plans to widen the gap on prices away from the other large grocery chains and move closer to the price levels on offer at Aldi and Lidl. It is currently on average 8pc cheaper than the other three chains and 11pc more expensive than the discounters which Clarke wants to narrow to 5pc.