Asda attributed the decline in its clothing and general merchandise category to the “unseasonal weather” across this period which impacted sale of seasonal ranges.
However, for the 13 weeks ending 30 September 2023, Asda reported revenues of £5.4bn ($6.7bn) and a 2.8% increase in like-for-like sales, compared to the same period of the previous year.
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The supermarket retailer also saw strong performance in key George categories like Back to School, which it says had its “best-ever” performance on school clothing, with sales 9% up year-on year.
Additionally, Asda’s like-for-like food sales increased by 3.2% during Q3, compared to a year earlier. This, as the retailer explains, is underpinned by the strong performance of its Just Essentials value range, with sales up by 21% year-on-year, in its second year since launch.
Asda’s Co-owner, Mohsin Issa, said: “Despite inflation easing slightly, we know that many families are still struggling, as disposable income for the average household is 10% down compared to two years ago. Throughout the quarter we have been focussed on helping customers save money whenever they shop with us, and this remains our key focus. This means keeping prices low on the products they buy the most, putting money back in their pockets via the Asda Rewards app and passing on savings whenever there is an opportunity to do so.”
Asda further explained that to ease the financial pressures facing families, it ran two separate price drop campaigns during the quarter, lowering the prices on over 600 popular products by an average of 10%, taking the total amount Asda has invested in lowering prices for customers this year to £130m.
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By GlobalDataAnalyst POV: The chinks in Asda’s armour are beginning to show
GlobalData retail analyst, Joe Dawson, pointed out that “the chinks in Asda’s armour are beginning to show,” as retail sales growth collapsed in Q3 despite still persistent inflation. This was after the supermarket retailer experienced strong growth in the first two quarters of the year.
He said the 2.8% increase in like-for-like sales in the 13 weeks ending 30 September 2023, was a lower rate than what rivals supermarkets Tesco, Sainsbury’s and Marks & Spencer reported for their first-half results that covered a similar period.
Dawson continued: “The retailer reported switching losses to all of its major competitors except Morrisons over the summer period, as like-for-like sales growth dropped sharply in July and failed to recover to June levels. Total sales were kept afloat by food sales growth of 3.2% year on year, while the unseasonably poor weather in summer hit clothing and general merchandise sales, down 4.7% and 1.9% respectively.”
He added the higher markdowns on unsold stock due to poor demand were to blame, as consumers spent less on summer clothes and outdoor categories.
Dawson cautioned that Asda’s focus on development of high quality and good-value own-brand products must be stepped up if it is to compete with retailers that have already established similar ranges. He shared it is important that the retailer does not lose focus of the core business going into the golden quarter and must seek to improve its shopkeeping to avoid losing out on sales due to “poor availability” and “lack of range.”
