Asda reports Q1 performance amid biggest ever drop in household disposable income

Asda has today updated investors on the stark challenges facing UK families as it reported its first quarter sales covering the period from January to March 2022.

The supermarket’s latest Income Tracker revealed that households’ disposable income dropped by £40.38 per week year-on-year in April, the largest fall since the tracker was created in 2008, with income for those under 30 and over 75 most significantly impacted.

Households were squeezed by the removal of Ofgem’s price cap, resulting in gas price inflation of 95% and electricity prices rising by 53% in April. The sharp rise in living costs has seen household disposable income fall to an average of £205 per week – the lowest figure since October 2018.

Asda’s like-for-like sales declined by 9.2% during the quarter compared to the exceptional period of Q1 2021, which coincided with the UK’s third national lockdown, resulting in more meals being consumed at home. In addition, Q1 2021 sales also benefited from the earlier timing of the Easter holidays.

During the period, Asda’s like-for-like food sales stepped back 7% versus the prior year, reflecting a shift back into eating out of home following the easing of lockdown measures.

However, the step back in sales versus the prior year was more strongly felt in clothing (19.3%) and general merchandise (23.7%) as sales in Q1 2021 benefitted from the closure of non-essential retail.

With severe cost pressures facing consumers, Asda has invested over £90m in expanding its new Just Essentials value range and Dropping and Locking the price of over 100 family favourite products until the end of the year.

These investments further strengthen Asda’s position as the lowest-priced ‘Big Four’ supermarket – a position that is recognised regularly by the Grocer 33, Which? magazine and other independent price checks.

The supermarket also announced it would increase the pay of its hourly paid shop floor colleagues from £9.66 to £10.10 per hour from July.

Asda continues to expand the trial of its Asda Rewards loyalty programme, which is now live in 48 stores and has opened 35 Asda on the Move stores, with the most recent site opening today in Ashington, Northumberland.

Mohsin Issa, Asda’s Co-owner, said, “The latest Asda Income Tracker highlights the stark reality facing millions of families in the UK right now with household incomes more squeezed than ever.

'Asda has a strong heritage of investing in price and customers can trust us to be on their side when they need it the most. We are investing in helping our shoppers manage the challenges of the here and now, as well as progressing critical strategic initiatives including loyalty, convenience and enhancing our in-store offering, which will all deliver long-term value.”

Asda confirmed that Ken Towle has joined the business this week as Retail Director, with responsibility for running the supermarket’s 640 stores. Ken has over 30 years retail experience with Tesco and more recently as CEO of the convenience chain Nisa.

In the coming weeks, Ken will be joined on Asda’s Executive Management team by Kris Comerford, the new Chief Commercial Officer for Food. Asda also confirmed Michael Gleeson will be joining the supermarket next year as Chief Financial Officer.

Mohsin commented, “We are very pleased to have Ken onboard and look forward to welcoming Kris in a few weeks and Michael next year. They are great additions to our strong team and will bring a combination of experience and new thinking into the business at a time when we are focussed on doing all we can to help customers during these exceptionally tough times.”