Asda sales slide as price cuts fail to arrest decline

Asda continued to struggle, the supermarket chain's US parent Walmart admitted as it released first quarter results, with the UK division seeing declines in traffic and food volumes.

Like-for-like sales at Asda fell 5.7% for the 13 weeks to 30 March, as the business was the only part of the Walmart group to fail to grow comparative sales during the quarter.

With Asda not organising a separate press event in the UK, Walmart chief financial officer Brett Biggs told analysts Asda continues to struggle, which he blamed primarily on the fierce competition in the UK market.

"Improvements in price and product availability throughout the quarter were not enough to overcome traffic and food volume declines in our large format stores," he said.

"However, Project Renewal remains a focus with the aim to simplify and strengthen the customer offer, reduce costs and drive sales. The cost analytics program, which is part of Project Renewal made good progress and delivered savings we were able to invest back into the business."

UK boss Andy Clarke launched the project in October with a £500m price investment commitment added to the £1bn committed in last year's five-year plan, with an extra investment campaign called 'Pocket More' launching in February that aimed to cut Asda's prices below Tesco, Sainsbury’s and Morrisons on a further 1,600 lines.

That month Clarke also felt it necessary to defend the grocer, saying it was "not in crisis" despite sales worsening in the fourth quarter and market share shrinking.

On Thursday, analysts at Shore Capital said they expected Asda's like-for-like sales to be down by circa 4%, continuing the recent run of market share loss.

"Asda is seeking to slow the sales loss by simplifying its offer, cutting costs and reducing prices. More needs to be done, however, for Asda to stem the flow of customers to discounters and improving superstore competitors to our minds."