Asda keeps profits rising during tough year for rival store chains

Asda CEO Andy Clarke
Asda CEO Andy Clarke
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SUPERMARKET chain Asda saw its sales and profits rise in 2013, as it continued to outperform many of its rivals during a period of economic uncertainty and intense competition in the grocery sector.

The Leeds-based company, which has around 10,000 staff in Yorkshire, said many of its customers faced low wage growth and rising energy bills in 2013.

During 2013, Asda, which is owned by US-based Walmart, reported profits before tax of £914m, which was an increase of five per cent in underlying profits. Sales rose two per cent to £23.3bn.

The company’s highest paid director, the chief executive Andy Clarke, had a total remuneration of £1.765m in 2013, down from £1.80m in 2012.

An Asda spokesman said: “The figure shown is the total remuneration package, part of which is in the form of shares and share options which are earned over a period of time – typically three years.

“The decrease is reflective of fluctuations in the Walmart share price and US dollar exchange rate.”

In a statement to accompany the Asda Group’s accounts, the company said that 2013 had been “another tough year for our customers with low wage growth and increases in costs such as utilities and essential item price inflation exerting pressure on disposable incomes”.

The statement continued: “In the context of this market, we strengthened our position as price leader through major investments in price entering the second year of our “Price Lock” initiative which saw investment in the price of everyday essentials such as bread, butter, milk and eggs.”

During 2013, Price Lock was expanded into new categories such as produce and Asda developed a new online tool.

The statement added: “In November 2013, we announced our new strategy to redefine value retailing in the UK in response to the structural changes facing the UK grocery market including growing online and discounter sectors.

“This focuses on continuing the journey of investing in price and quality, pledging £1.25bn of investment over five years, while focusing on improving access and reach across the UK, through online growth and physical expansion in London and the South East.”

Recent data has shown that Asda was the only one of the big four grocers to increase sales and market share in the three months to the end of September.

Data from Kantar Worldpanel, which was released last month, showed that the UK grocery market grew at its slowest rate for more than 20 years as price inflation fell to zero, reflecting price cuts across the sector.

The data showed that Asda reported the best results among the big four supermarkets, increasing its market share to 17.4 per cent and growing sales by 0.8 per cent compared with last year,

Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, said last month: “Asda’s consistency is shining through. Shoppers are warming to the lower level of promotions. They appreciate the clarity.”

Kantar’s data showed that Tesco was by far the worst performer with sales down 4.5 per cent, slashing its market share from 30.2 per cent to 28.8 per cent.

Bradford-based Morrisons’ market share remained under pressure, with sales down by 1.3 per cent, cutting its market share from 11.1 per cent to 10.9 per cent, but the rate of decline has slowed considerably as its fresh food promotional voucher scheme has taken effect.