Asda: Supermarket giant reports 'clear improvement' despite delayed IT systems upgrade
Asda has said recent sales have been knocked by “temporary disruption” to product availability following its delayed IT systems upgrade.
However, boss Allan Leighton said he has seen a “clear improvement” in performance at the UK’s third-largest supermarket chain as it pushes forward with a major turnaround strategy.
The company said that, as of yesterday morning, it had finished rolling out its £1 billion Project Future upgrade of its IT systems in all stores and food depots, which Mr Leighton said was potentially the “biggest IT systems change, certainly in Europe, maybe ever”.
“The cost is material, but largely that is now behind us,” he said.
Asda said this work had led to “some temporary disruption with product availability” in stores and online, while it changes over from the old to the new system.
This is expected to have an impact on the supermarket chain’s sales over the three months until the end of September.
Mr Leighton said: “We’ve been doing 50 stores a week, every week, for 10 weeks. The collective scale of that does cause some friction, some of the systems don’t run as fast as they should do… so that’s where the impact has been.”
Mr Leighton, who returned to the business last year, 25 years after he was its chief executive, has led a major overhaul focused on cutting prices and improving availability on shelves in a bid to halt declining sales.
The Leeds-based retailer said it slowed down the rate that sales were declining over the latest quarter.
The supermarket chain’s total revenues, excluding fuel, decreased by 0.2 per cent year-on-year to £5.3 billion in the three months to the end of June. Revenues excluding fuel had dropped 5.9 per cent in the first quarter of the year.
Compared like-for-like with the previous year, sales were also down 0.2 per cent in the latest quarter, with the retailer claiming recent efforts to reduce price had helped improve its performance.
The grocer has been investing heavily in its Rollback programme of price reductions, as it seeks to win back market share from its rivals. The average price reduction on those products is 22 per cent, Asda revealed.
Mr Leighton said the price cuts were helping to draw in customers affected by food and drink inflation, which rose to 4.9 per cent last month, official figures showed.
In the update, Asda added: “In May, Asda opened its first standalone George concept store at Crown Point in Leeds. The store showcases the best George clothing, homewares and general merchandise ranges in a modern retail setting.
"The concept has been very well received by shoppers and Asda is planning to rollout a further 10 stores across the UK next year.”