Asda reports a rise in annual profits

Asda is following a strategy focused on lower prices to narrow the gap with the discounters
Asda is following a strategy focused on lower prices to narrow the gap with the discounters
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Asda said its operating profit rose 9.2 per cent in 2018 - a year when it unsuccessfully tried to merge with rival Sainsbury’s.

Sainsbury’s merger with Leeds-based Asda was blocked by Britain’s competition regulator in April, a full year after it was launched. Asda’s parent company Walmart said in May it would instead look at floating Asda on the London Stock Exchange.

Accounts showed Asda’s operating profit was £803.2m in the year to December 31, on revenue up 3.1 per cent to £22.92bn. As was the case in 2017, no dividend was paid to Walmart.

Under chief executive Roger Burnley, Asda is following a strategy focused on lower prices to narrow the gap with the discounters, a step-up in innovation in own-brand products, better store environments and product availability, along with improvements in its e-commerce operations and use of technology.

Mr Burnley said in May the timescale for a possible flotation was two to three years.

Last month Asda reported a small rise in underlying sales for the second quarter of its 2019 year. It said uncertainty surrounding Brexit was affecting its customers.

The accounts showed that Asda’s like-for-like sales rose 1.6 per cent last year, compared with a 0.5 per cent increase in 2017.

The group said its online sales grew ahead of the market in 2018 following developments to the website, mobile and tablet apps.

Asda’s chief financial officer Rob McWilliam said: “The challenges faced in the market during 2018 have only intensified as we move through 2019 and we remain steadfast in our approach to win on price, deliver a consistent customer experience and drive growth where customers care.”

The latest figures from Kantar show that Asda sales shrunk by 1.5 per cent in the 12 weeks to August 11.