Asda feeling the squeeze
Wal-Mart UK operation sees growth slow
Wal-mart has acknowledged that Asda is finding the intensely competitive UK grocery market tough going.
The world’s biggest retailer, which confirmed on Thursday that its first quarter sales were below internal targets, does not break down sales figures for its international businesses by country.
However, Wal-Mart has told journalists that Asda, which has been an engine of growth for the international division since Wal-Mart bought it in 1999, has been through a ‘challenging’ period. In the three months to the end of April, Asda’s like-for-like sales growth was in the low single digits and operating profits were below targets.
Wal-Mart Treasurer Jay Fitzsimmons said in a recorded message: “After years of strong growth in the market, retail sales have slowed and the environment has become very competitive. Operating profit in the quarter in the UK was below plan.”
Asda spokesman Nick Agarwal told news agency the [i]Press Association [/i] that the figures were up against strong growth a year ago. He said: “We’ve had five years of stunning growth and so are now comparing against some very tough numbers.
“Even bearing in mind those challenging comparisons, we’re still growing. It’s the kind of growth some of our high street competitors would give their eye teeth for.” He added that Asda’s speciality divisions, including photo, optical, jewellery and pharmacy, were the fastest growing areas of the business.
The latest market share figures from TNS, published last week, showed Asda under pressure from both market leader Tesco, which has increased its grocery market share to 29.8 per cent, and Sainsbury’s, which has seen its share increase from 15.5 per cent a year ago to 15.9 per cent.
Asda, which overtook Sainsbury’s last year to move from number three to number two in the UK supermarket league, recorded a marginal dip in share, down from 16.6 per cent to 16.5 per cent.
