Asda cautious on outlook as sales slip
19 August 2010 09:38
Asda has reported a fall in underlying sales for the second quarter in a row, driven by weak consumer confidence as the prospect of public sector spending cuts, rising taxes and job losses looms. The 377-store chain, owned by Walmart, warned that the 2010 outlook remained challenging with UK families facing the lowest level of disposable income in the final quarter for two years.
Sales excluding fuel and VAT fell 0.4% in stores open at least a year in the three months to June 30th, compared with a 7.2% rise a year earlier and a 0.3% fall in the first quarter – the first fall seen in the last four years.
"These are increasingly uncertain times for millions of families across the UK," commented chief executive Andy Clarke.
Asda said its total sales increased by a "low single digits" percentage while gross profit rose year on year as it sold a higher proportion of general merchandise and George clothing.
In other news, Asda is in the process of rolling out its smaller store chain. Traditionally, stores are 42,000 sq ft sheds but the smaller sites are up to 25,000 sq ft. Asda already operates 26 but has acquired Netto's 193 store chain and plans to convert these as quickly as possible once the Office of Fair Trading gives the green light. The average Netto store size is just 8,550 sq ft.
Meanwhile, Asda parent Walmart has seen sales in its US home market fall for the fifth quarter in a row. Group quarterly profits rose by 3.6% but sales at US discount stores open for a year fell by 1.8%. "The slow economic recovery will continue to affect our customers," said Mike Duke, Walmart's chief executive. "We expect they will remain cautious about spending."
Retail news is updated every weekday and is provided courtesy of: 
