Worst year for Asda since Walmart acquisition

To say that British supermarket chain Asda suffered a weak year would be an understatement: 2016 was its worst year since Walmart acquired the chain in 1999.

“Below expectations”

The United Kingdom’s third largest supermarket chain suffered a 5 % turnover drop last year, from 22.3 to 21.6 billion pounds (about 24 billion euro). Its pre-tax profit also dropped 20 % to 791.7 million pounds (900 million euro). These results are its worst since American distribution giant Walmart acquired the chain in 1999.

Walmart veteran Sean Clarke, who succeeded Andy Clarke at Asda last summer and who implemented a strategy of lower prices, higher quality and better service, said this was a performance “below expectations”. One does not need to look far to find reasons: British consumers increasingly shop online and for other purchases, they go to smaller convenience stores (and Asda barely has any). In the meantime, discounters Aldi and Lidl are rapidly gaining market share with their pricing strategy, mainly stealing it away from Asda, even though it has also turned low prices into its core business.

Nevertheless, the chain seems to get back on track: in the twelve weeks leading up to 16 July, Asda said it attracted 398,000 new customers. According to market research firm Kantar, sales in that quarter were 1 % higher than in the same quarter last year.