Asda sales slump continues in 3Q

Asda’s woes continued as the the UK retailer saw weaker trading in its third quarter, with net sales falling for the ninth quarter in a row.

The retailer saw sales fall 3.8% with like-for-like sales also down 5.8% in the period, with traffic was also down 4.2%, US-based parent company Walmart said, excluding e-commerce and fuel. Operating income also fell, it noted.

Wal-Mart said Asda’s comparable sales remained under pressure, but it reiterated its key concern was improving the customer experience and building sales momentum while simplifying the offer, improving product availability and making strategic investments in service and price.

In August the retailer returned its worst-ever figures, seeing a 7.5% drop in sales, with Wal-Mart chief executive Doug McMillon warning that although Asda’s decline was being addressed with “urgency”, it would take time to turn around the business

Shore Capital analyst Darren Shirley said it was “no surprise” that the retailer was continuing to underperform, pointing to the most recent Nielsen stats which showed it fall 4.9%, although he argued that standards had improved.  He also praised the way in which Wal-mart was giving more support to new boss Sean Clark, criticising its previous attitude to Asda as “highly irrational”.

“We have said for some time that we believe the parent has extracted too much human and financial capital from the business, leaving previous CEO & President, Andy Clarke, somewhat high and dry; highly irrational to our minds,” he said “Accordingly, with a new leader in place, we believe that Wal-Mart has responded in the right way by giving Sean Clarke some more support. Indeed, we do see some evidence of early shoots of a new in-store execution approach that is bringing a slightly better experience for shoppers albeit we know that this is not a universal view

Across its wider group business, the US retail giant, which operates in eleven global markets including the US and UK, reported a “solid” third quarter, with growth in its online operation, with revenues of $118.2.

The retailer is also said to be launching Asda’s best-selling Chilean Malbec which saw booming sales across its UK store after being named the best single varietal under £15 by Decanter magazine. In September, the retailer announced it was upping its focus on fine wine parcels through its online Wine Shop as it seeks to increase exposure and build momentum of the wine site.