Asda's sales excluding fuel and acquisitions climbed 2%, comparable-store sales rose 0.1%, Asda.com sales increased nearly 20% in 14 weeks ending Jan. 7; CEO says 2012 priorities include a 'relentless' focus on price
February 21, 2012
– Today Walmart reported its FY 2012 and Q4 financial performance for the year ending 31 January 2012.
At an event today, we gave an overview of Asda’s performance in 2011 and the run up to Christmas and launched our new research into mums views on the state of the economy – the Mumdex.
For those of you who couldn’t attend, below is a summary of the key points.
Asda’s LFL sales for the 14 weeks to January 7th were up 1.0 per cent* (ex-VAT and ex-petrol) – driven by the successful delivery of the Christmas plan in the final quarter of the year. The latest retail data shows continued market outperformance (source, Kantar Till Roll, 12 weeks to 22nd Jan 2012) showing Asda growing sales at the fastest rate of the top four supermarkets.
Finance Director Rob McWilliam confirmed that the APG £5 off £40 bonus hit a chord with Asda customers in the final quarter and at its peak Asda saw 1m APG checks per week. APG checks have now settled back to around 500,000 per week.
The partnership with Leiths for its Extra Special brand also resonated in the final quarter – with customers valuing the fact that quality doesn’t need to cost the earth. Extra Special was the fastest growing premium own label in December.
Looking at Asda’s overall performance in 2011 Rob drew attention to:
Price & Quality – Asda had managed to grow both price and quality perception at the same time – retailers tend to do one, but not both at once. Asda’s actual price gap over competitors is now almost twice the level it was in 2008. On quality, own label market share growth has outperformed the rest of the big four in 2011.
New Formats – 2011 was a signal year for Asda creating a chain of over 170 small supermarkets virtually from scratch, thanks to the conversion of the Netto stores acquired from Dansk.
New Channels – Asda’s online business also continues its steep growth curve. Sales through asda.com rose by almost 20 per cent in the quarter.
Asda COO Judith McKenna outlined the findings of a new research study called the Mumdex, which looks at the sentiments of Asda mums towards the economy and their community.
The research shows that, although they have concerns about the economy, they’re positive about their ability to do the best for their families and manage through what the economy throws at them. They also want to see businesses playing their part in supporting them and their communities through tough times.
You can download the full Mumdex report here
Asda President and CEO Andy Clarke stated that listening to customers would remain at the heart of Asda’s strategy for 2012 and that the retailer would be ’focussing on the plan’ in 2012. The key priorities are:
A ‘relentless’ focus on price – Asda will do what it loves to do … ensure money stays at the most important parts of the supply chain, with the producer and the customer. He noted: “There’s more to come with APG – We have only just scratched the surface of what the APG can do for our customers – offering real pricing transparency and a guarantee when every penny or pound matters.”
A continuous journey of investment in quality – Asda will be investing over £15m in rolling out our Butcher’s Selection range across the entire meat range in 2012, as well as investing £1.6m in developing fish counters and bringing the Chosen by you approach to its fish range.
And delivering great service in stores and in communities – Asda will be investing £4.5m in rolling out its “Community Life” programme across all its stores in 2012 as well as continuing to invest in colleague training programmes including Apprenticeships.
For ease of reading, we have pulled out the key elements of the Walmart script relating to Asda:
In the UK Asda had a strong fourth quarter and a record Christmas, growing sales and increasing operating income faster than sales, excluding fuel. Net sales, without fuel, and excluding the Netto acquisitions, grew 2.0 percent for the quarter.
In the fourth quarter of this year comparable sales, excluding acquisitions and fuel, increased 0.1 percent, with traffic increasing 0.6 percent and average ticket declining 0.5 percent. In addition, Asda’s online business continues to perform well, with quarterly sales growth of 19.9 percent from last year.
Asda won more customers over the quarter with a simple pricing strategy, and the Asda Price Guarantee reached a high of almost 1 million basket checks per week in December.
Fourth quarter expenses grew slower than sales and, when excluding Netto, Asda’s expenses declined from last year. Asda’s “We Operate for Less” program has a history of successful savings and enabled Asda to invest in a higher level of customer service during the holiday period.
With “Powered by Walmart”, we will begin to see Asda’s programs, such as in-store associate scheduling, lean logistics initiatives and fresh waste reduction, show up in other markets.
In April, Asda acquired the Netto stores in the UK and the majority of those stores were converted to the Asda brand. Sales at the converted Netto stores exceeded expectations during the year. Asda ended the year with a total of 541 stores, including 32 Supercentres, 309 Asda Superstores, 27 Asda Living stores and 173 Asda supermarkets.
Continuing its commitment to quality, Asda’s partnership with world-famous cookery school Leiths was important for holiday entertaining. Leiths endorsed Christmas items across Asda’s Extra Special premium private brand range, which resulted in record sales in the week before Christmas.
When it comes to customer trust, Asda was the clear winner this holiday season. Recent independent research undertaken by The Grocer showed ASDA selected by shoppers as the UK’s most trusted supermarket.