Can the last man standing remain at the Asda helm?

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The big question doing the retail rounds this week is will Andy Clarke get the chop following another fall in sales at Asda?

​​The Leeds-based ​​retailer lost its place as the UK’s second biggest grocer ​this week after Sainsbury’s nudged ahead​. Asda saw the biggest decline in sales out of all the supermarkets, down 2.7 per cent, according to the latest Kantar Worldpanel data.

​​Asda’s sales fall over the 12 weeks to July 19 saw its market share decline to 16.4 per cent from 17.0 per cent in the same period last year.

That meant Sainsbury’s overtook Asda with a market share of 16.5 per cent, even though its own sales fell 0.3 per cent.​

​Clarke is the last man standing at the big four grocers after Tesco and Morrisons ousted their CEOs and Justin King got out of Sainsbury’s at just the right time.

Analysts are now questioning how much patience Asda’s US owner Wal-Mart will have with Clarke.

Yet Asda has been very clear about its strategy.

It won’t join in the short term vouchering of its rivals in order to flatter Kantar Worldpanel and other retail statistics. ​Morrisons and Tesco have resorted to ​vouchering ​in a bid to win shoppers back from the discounters, Aldi and Lidl.

Clarke’s mantra is that sales are vanity and profits are sanity. ​

Asda believes that its focus on keeping prices at a constant low rather than yo-yo pricing is the way to shoppers’ hearts.

Clarke has likened his rivals’ tactics to the Bank of England’s quantitative easing programme and said that this sort of short term discounting has to end soon as it’s unsustainable.

​Fraser McKevitt, Kantar Worldpanel’s head of consumer and retail insight, said: “Asda is run slightly differently to other retailers. They’re not listed in the UK and they are not chasing share at any cost, but are trying to run the business profitably.”

​But analysts say the pressure is now mounting on Clarke​​.

However, it is understood that Asda’s parent Wal-Mart, the world’s biggest retailer, is happy to see Asda’s sales fall if profits can be maintained.

While its three main rivals have seen profits crash, analysts ​believe that Asda has managed to maintain its profits at around £1bn a year​, which is no mean feat when compared with its rivals.

Morrisons’ underlying profits fell 52 per cent to £345m in the year to February 1.

​In April ​Tesco revealed losses of £6.4​bn – one of the biggest in UK corporate history​ – following a £7​bn write-off.

Stripping out the exceptional items, Tesco’s​ UK ​profits slumped 79​ per cent​ to £467m.

In May, even Sainsbury’s reported its first loss in a decade following yet more property writedowns.

It made an underlying pre-tax profit of £ 681m in the year to March 14, down 15 per cent from £798m the year before.

So while Asda’s sales may be falling, it’s keeping Wal-Mart happy by maintaining profits. At the same time its rivals are trashing their profits in order to buy sales.

But there is no way that this level of vouchering across the market is sustainable. Shareholders in Tesco, Sainsbury’s and Morrisons will accept a few years of pain, but then they will demand to see profits rise.

Asda is in the second year of its five-year strategy and it says that is it starting to see some good signs.

It is trialling new concepts in its biggest stores and in its smaller stores it has ditched the rows of tomato ketchup in favour of chilled beers and wines, fresh pizza and fresh bread.

People shop in these stores for their supper, not the weekly shop.

An Asda insider said: “There is a plan. We always knew 2015 would be tough. We are dealing with it. The plan is working.

“There won’t be any vouchering and we won’t have a knee-jerk reaction. Andy is here to stay.”

Asda is refusing to buckle under pressure and with Wal-Mart’s backing, Clarke can afford to ride out the monthly Kantar kicking.