Asda has reported a better than expected sales increase in the first three months of 2018, boosted by the timing of Easter.
Leeds-based Asda, which is proposing a £12bn merger with Sainsbury’s, said like-for-like sales jumped 3.4 per cent in the first quarter, its fourth consecutive increase in sales.
Adjusting for Easter, which fell within the first quarter of 2018, like-for-like sales grew 1.0 per cent. This was double the 0.5 per cent increase seen in the last three months of 2017.
Dewsbury-born Roger Burnley, who took the helm as Asda’s president and CEO in January, said: “Our Q1 performance – even when adjusted for increased sales from an early Easter – represents genuine momentum with four consecutive quarters of growth.
“During the first three months of the year, we have continued to invest sensibly where it matters most to our customers with lower prices, innovation in our own brand and further improving their shopping experience whether in store or online.”
Mr Burnley, who is the first Yorkshireman to take the helm at Asda in over 30 years, said Asda has stepped up its commitment to everyday low prices with the launch of “Rolled Back Staying Back” which now extends to 667 lines that customers buy the most. It has also launched 216 new own brand products including 29 “free from”, a range which is increasingly important to its customers.
It attracted 246,000 new customers to its stores in the quarter. Online sales rose 8.3 per cent, with sales from its clothing range George.com jumping by 21.9 per cent.
“Whilst we are not complacent, we are positive about our growing momentum and excited by the opportunity that our proposed merger with Sainsbury’s offers to accelerate our successful strategy and go further, faster,” he added.
Parent company Walmart’s president and CEO, Doug McMillon said: “Recently, we took some strategic actions to further position our portfolio for long-term growth. “We were pleased with the response of our colleagues in the UK following our announcement of the proposed merger of Asda with Sainsbury’s. We believe this proposed combination is good for customers and colleagues as well as shareholders.
“In the UK, we saw sequential improvement in the business as comp sales increased for the fourth consecutive quarter. We continue to remain focused on improving the customer experience in our stores and providing value for customers by investing in lower prices.”
Asda took a hit on profits as it continues to bring down prices in an effort to stay competitive.
Its gross profit fell year-on-year, which the company attributed to its investment in price reductions and an early Easter forcing the firm to change its sales mix.
Asda has been leading a turnaround in an attempt to improve sales amid a long-running supermarket price war.
It is proposing to merge with Sainsbury’s in a deal which will enable it to invest in lower prices. Sainsbury’s CEO Mike Coupe has said the merger will produce £500m in cost savings.
Consumers have been promised cheaper prices on everyday items, although it is not yet known where the price cuts will fall.
The Competition and Markets Authority is scrutinising the deal and it is expected that scores of stores will have to be offloaded as part of the competition review.
Asda has also been axing jobs in the UK, announcing in January that 28 roles will go at its head office on top of 300 job losses revealed in September as part of a major cost-cutting drive.
Asda’s improved performance reflects moves by Mr Burnley to re-establish Asda’s competitiveness by lowering prices, improving the availability and quality of its food and making its stores more attractive to shoppers.