UK | Asda has updated investors on its Q3 trading performance covering the three months to the end of September 2023, reporting revenues of £5.4bn and a 2.8 percent increase in like-for-like sales compared to the same period of the previous year.
Mohsin Issa, Asda’s Co-owner, said that despite inflation easing slightly, Asda knows that many families are still struggling, as disposable income for the average household is 10 percent down compared to two years ago.
“Throughout the quarter, we have been focused on helping customers save money whenever they shop with us, which 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 possible,” said Issa.
Asda’s like-for-like food sales increased by 3.2 percent during Q3, compared to a year earlier, underpinned by the strong performance of its Just Essentials value range, with sales up by 21 percent year-on-year in its second year since launch.
To ease the financial pressures facing families, Asda ran two separate price drop campaigns during the quarter, lowering the prices on over 600 popular products by an average of 10 percent, taking the total amount Asda has invested in lowering prices for customers this year to £130m.
The supermarket gave £73m back to customers through its Asda Rewards loyalty app in Q3, increasing the total amount that customers have earned in their Cashpots since Rewards launched last year to almost £300m.
Asda also confirmed to investors that it had repaid a £200m loan facility used to acquire the Co-op’s convenience stores and forecourts business last year. The repayment was made possible by Asda’s strong cash generation in the year to date, which reduces the retailer’s total debt leverage to 3.8x.
Michael Gleeson, Asda’s Chief Financial Officer, said that Asda had a sustainable capital structure, strong cash generation and a clear strategy to deleverage over time, as the early repayment of the loan facility used to acquire the Co-op business demonstrates.
Asda grew ahead of the market in Q3 in clothing and general merchandise. However, like other retailers, the unseasonal weather across this period impacted sales. This affected seasonal ranges and was the main driver in the 3.4 percent decline in like-for-like sales year-on-year.
However, Asda posted a strong performance in key George categories like Back to School, which had its best-ever performance on school clothing, with sales nine percent up year-on-year, and George Home, with five percent year-on-year growth in the quarter. A notable highlight was the Stacey Solomon home collection launch in September, which accounted for 70 percent of total online sales and the busiest day ever on the George Home website.
Following the acquisition of EG Group’s UK convenience business and the 119 stores acquired from the Co-op last year, the programme to convert the acquired stores to Asda Express is underway. The 100th Express store is set to open this week. Asda expects to complete the conversion programme in the first half of next year, bringing the supermarket’s lower fuel and grocery prices to many more communities across the UK.
With Christmas less than six weeks away, Asda announced that it has expanded its partnership with FareShare and will donate 1m meals during the festive season. Asda has worked with the charity since 2013, and to support FareShare’s efforts further, the supermarket has worked with its wholly-owned subsidiary IPL to identify surplus food from its supply chain.
Mohsin Issa, Asda’s Co-owner, said that whether it was through the continued focus on offering the best prices to our customers or campaigns like £1 café meals for kids and over 65s – Asda was committed to supporting families through the cost-of-living crisis.
“We’re incredibly proud to build on our longstanding relationship with FareShare and work across Asda and IPL to identify surplus food within our supply chain to provide a million additional meals in the run-up to Christmas.”
Asda has launched 275 new festive lines, several of which have scooped prestigious quality awards in the Good Housekeeping and BBC Good Food taste tests. These include the Extra Special Norfolk Bronze turkey crown with pork, sage & caramelised onion and the Extra Special Jewelled Topped Christmas Pudding.
The supermarket is focussed on making Christmas affordable for all customers and has launched a frozen Christmas dinner for six that costs £25. This works out at £4.17 per head, and all the products featured are cheaper than last year by an average of eight percent.
To provide an extra festive spending boost, Asda gave more than a million customers who use its Asda Reward app a cash bonus of up to £5 later this month for saving money in their Christmas Saver Cashpots.
