Asda has today unveiled its fourth quarter - 13 weeks to 1st Jan 2016 and full year financial results - 52 weeks to 31st December 2015.
The results show a 5.8% fall in like-for-like sales of (5.8%), and for the full year, a 4.7% drop in like-for-like sales.
Andy Clarke, President and CEO, said, “2015 was a difficult year. The UK retail market is continuing to undergo significant and permanent structural change, competition in our sector has been fierce and our market share has come under pressure.
'In that context, our results for the year have been commendably stable, balancing investment in our customers with disciplined financial management in a period when many of our competitors have suffered severe falls in profitability. We have steered a careful course through this very turbulent period for the industry and through a complex set of challenge.”
Reflecting the likelihood that difficult conditions will continue in the foreseeable future, Clarke outlined that he had a clear strategy in place to reaffirm Asda’s market leading proposition as the UK’s lowest price, full range supermarket business.
He said, 'We have identified what we have to do to reposition the business to recover sales and have already taken decisive action through Project Renewal. In December we became the first retailer to take fuel prices below £1.
'The first phase of the price investment we announced in January has kicked in today with ’Pocket More’ to make us lowest price on a further 1,600 lines compared to Tesco, Sainsbury’s and Morrisons – and there’s more to come. Through this investment we will also take another step in narrowing the price gap to the limited assortment discounters.”
He went on to explain that other key actions include fundamentally changing the way the retailer buys products to deliver better volume and drive lower prices for customers. It is also simplifying the business which began with Head Office structures and reviewing store services as well as reducing product ranges to remove duplication.
Asda launched Project Renewal last October, updating its five year strategy and prioritising investment to better address the fast changing needs of its customers. The core objective is to extend Asda’s everyday low price, further increasing its price advantage over major competitors and strengthening its competitive position against the limited assortment discounters.
Key elements in the plan for 2016 are:
· £500m price investment in addition to the £1 billion committed in the five year plan
· Overhauling range assortment to better reflect what our customers want
· The modernisation of 95 of Asda’s largest stores – new layouts and changes to merchandising – to improve ease of shop. Improvements will be delivered across 35% of the estate
· Simplifying the structure at Head Office and our services in stores to drive operational efficiencies
· Joining the EMD buying alliance: benefiting from the collective buying power of 250 supermarket chains across 15 nations and supporting the development of our own label range
Clarke commented, “Our strong financial position has allowed us to take bold and fundamental decisions about the way we need to run the business. We have taken control of our own destiny, and are not at the mercy of market pressures or whatever our competitors feel is necessary. While I am cautiously optimistic that our sales will gradually improve, it won’t happen overnight given that 2016 is likely to be another tough and competitive year for the sector as a whole.
“Project Renewal is the right strategy to get us back on the front foot, using our market leading value proposition to give our customers low prices and unbeatable value. That has been Asda’s successful proposition over the last fifty years and that’s what will deliver sustainable growth in the long term. “