Asda, Britain's third largest supermarket group, said its underlying sales rose 2.8% year-on-year in its third quarter – a sharp slowdown from growth of 9.6% in the previous quarter and an underperformance versus its bigger rivals.
Asda, owned by brothers Zuber and Mohsin Issa and private equity group TDR Capital, reported revenue of £5.4 billion (€6.2 billion) for the three months to the end of September.
It said like-for-like food sales increased 3.2% but clothing and general merchandise sales fell 3.4% as, like other retailers, Asda was impacted by unseasonable weather across this period.
'Helping Customers Save Money'
Mohsin Issa, Asda’s co-owner, commented, "Despite inflation easing slightly, we know that many families are still struggling, as disposable income for the average household is 10% down compared to two years ago.
"Throughout the quarter we have been focussed on helping customers save money whenever they shop with us, and this remains our key focus. This means keeping prices low on the products they buy the most, putting money back in their pockets via the Asda Rewards app and passing on savings whenever there is an opportunity to do so.”
Recently, No. 2 player Sainsbury's said its second quarter to 16 September underlying sales rose 6.6%, while in October market leader Tesco reported an 8.4% rise in second quarter UK like-for-like sales.
Monthly industry data this year has also consistently shown Asda underperform rivals.
Asda also said it had repaid a £200 million (€229.9 million) loan facility used to acquire the Co-op’s convenience stores and forecourts business last year.
'A Sustainable Capital Structure'
“Asda has a sustainable capital structure, strong cash generation and clear strategy to deleverage over time, as the early repayment of the loan facility used to acquire the Co-op business demonstrates," finance chief Michael Gleeson said.
Last month, Asda completed the acquisition of the majority of petrol forecourt operator and retailer EG Group’s UK & Ireland business for an enterprise value of £2.07 billion (€2.4 billion).
Asda's strategy is to boost its convenience store presence by rolling out Asda Express stores across EG's 356 UK sites.
EG is also owned by the Issa brothers and TDR.
News by Reuters, additional reporting by ESM.
