Asda sees biggest sales fall on record

Man carrying Asda basket Image copyright Reuters

Supermarket Asda has seen sales fall 5.8% during the three months that include Christmas - its biggest quarterly sales fall on record.

The chain, which is owned by US retailing giant Walmart, saw sales fall 4.7% over the year as a whole.

Parent company Walmart also reported falling profits. Net income for the fourth quarter fell 7.9% to $4.57bn.

Andy Clarke, president and chief executive of Asda, said 2015 had been a "difficult year".

Asda's figures contrast with those of the other "big four" UK supermarkets. Morrisons and Tesco both beat forecasts while Sainsbury, the weakest, saw sales fall just 0.4% over the fourth quarter, which includes the vital Christmas period.

Discounters Aldi and Lidl, are both thriving and expanding fast.

Mr Clarke said the UK retail market was undergoing "significant and permanent structural change".

He said competition had been fierce and that Asda's market share had come under pressure. Bearing that in mind, he said results for the year had been "commendably stable".

Negative story

Asda is competing hard on price and concentrating less on one-off promotions. It decided not to participate in the retail discounting event, Black Friday, last November.

The company forecast that 2016 was likely to be another tough and competitive year for the sector as a whole.

George Scott, senior analyst at Verdict Retail, said Asda's strategy was not yet working: "Asda's now prolonged story of negative [sales growth] shows that it has not done enough to broaden its appeal beyond price.

"Away from price, Asda has a relatively weak reputation for quality... it also needs to do more to improve its staffing levels, adding reasons to visit, if it is to claw back ground from the discounters."

Walmart challenge

Parent firm Walmart, the biggest retailing chain in the world, is faring better than its UK subsidiary in terms of sales.

Despite the steep fall in profits, Walmart's sales rose 0.6% over the fourth quarter, its sixth quarterly rise in a row.

But Walmart trimmed its sales forecast for the year. It said it now expected sales to be flat.

The company's shares fell 4% in afternoon trading.

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