Asda shows some recovery after troublesome 2016

By Jo Gilbert

Published: 23 February, 2017

Asda bosses said there is still a "lot of work to do" after the most recent sales figures showed some recovery for the ailing supermarket.

Sales fell by 2.9% in the final three months of 2016, but this was markedly less severe than Q3 when sales slid by 5.8% and 7.5% fall in Q2.

Pressure from the discounters eroding Asda's image as the cheapest of the supermarkets and a slap on the wrist from the regulator for the way it presents in-store price promotions all took their toll in 2016.

Doug McMillon, chief executive of US giant Walmart which owns Asda, welcomed the slowdown in sales decline in Q4, but said they were addressing the challenges faced in the UK over the past year with some urgency.

"The supermarket giant really has their work cut out for them," Martin Lane, managing editor of money.co.uk, said of Asda's chances of full recovery.

"They used to be known as the cheapest, but with Aldi and Lidl taking the UK by storm they've lost that crown and there's no quick way to win it back. I imagine it's going to take a huge re-brand and a focus on customer service if they have any hope in clawing their way back to healthy profits again in the foreseeable future."

Last year was also the year that Asda found itself at the centre of a price promotion scandal among the supermarkets.

Asda in particular was singled out for criticism by the Competition and Markets Authority (CMA) for misleading in-store promotions - a public naming and shaming which could have cost Asda some of its loyal customer base.

In response, Asda chief executive Sean Clarke said it has "sharpened" its pricing, and this week celebrated gaining an additional 140,000 customers shopping in-store in the fourth quarter.

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