LEEDS, England, 2015-11-18 — /EPR Retail News/ — Asda today reported its third quarter trading figures for 2015, posting a 4.5% fall in like-for-like sales for the 13 weeks to 30th September.
Speaking in London today, Asda President and CEO Andy Clarke said:
“There’s no doubt this represents another challenging quarter. Sales volumes remain under pressure from price deflation and the intensely competitive background remains throughout the food sector. Having said that, we have the financial strength and clear plan to sustain us through this period, while we take appropriate and considered action to further strengthen our competitive position.
“Last month I launched Project Renewal, an 18-month programme designed to work parts of my five year strategy harder to return us to long term, sustainable volume growth. Increasing our focus on the core business means strengthening some areas while pausing activity in others which will allow us to sharpen our customer offer and continue to improve operational efficiency.
“I’m confident that by reinforcing our offer we can further extend our price advantage over major competitors and close the gap against the limited assortment discounters – not only on price, but across range, service and quality.”
At the update, Andy gave more detail on Project Renewal and confirmed that he and his leadership team had acknowledged early on the need to evolve the five-year strategy in this volatile market – working on the detail of Renewal up to six months ahead of its launch. This included an in-depth evaluation of the changing behaviour of customers which analysed the way they shop today.
He explained the fundamentals of Project Renewal as getting back to a ‘simpler way of doing business’ in order to ‘deliver market leading value in a way customers will notice.’ Examples of this included working closely in partnership with suppliers on a range review programme to deliver an overall 10% reduction to remove duplication while sustaining choice and ensuring the best quality and the prices to deliver long-term volume growth. Other examples included investment in a refresh of 95 large stores and delivering proposition stores to continue innovating and taking learnings on what really works for customers.
He added: “This is a logical and necessary adjustment of our existing strategy, to better address the immediate challenges and permanent changes the market is facing. It is a slow and costly process to reconfigure any business to meet fundamental challenges on this scale, but I’m clear that only businesses which are well positioned, financially strong and able to efficiently deliver what their customers want can be successful in this environment.”
Joined by his Chief Finance Officer Alex Russo, Clarke spoke to the strength of his leadership team driving the strategy, adding he now had “one of the strongest, most experienced boards in the industry, which is looking forward to welcoming Roger Burnley to the Asda family as the new Chief Operating Officer” next year.
Russo pinpointed key highlights including Back to School and Halloween sales – up 9% and 12% YoY respectively, continued growth in online grocery – sales up 6% in the quarter, and George.com clothing sales growing ahead of the market and up 30%.
In terms of the retailer’s low cost operating model, a focus of the core of Asda’s strategy, Russo announced that store efficiency savings were on track to deliver £100m this year, and efficiencies in logistics will deliver a 3% saving.