In a Q3 trading update, Asda announced impressive results, with revenues reaching £5.4bn ($6.7bn).
It also announced a significant 2.8% rise in like-for-like (LFL) sales compared to the previous year.
Asda’s LFL food sales surged by 3.2% in Q3, driven by the success of the Just Essentials value range, experiencing a 21% year-on-year (YoY) sales increase.
As part of its strategic growth initiatives, following the recent acquisition of EG Group’s UK convenience business and the 119 stores acquired from the Co-op last year, Asda is actively progressing in converting these stores into Asda Express locations.
Price reduction initiatives
Asda executed two price drop campaigns during the quarter, lowering prices on more than 600 popular products by an average of 10%, totalling a £130m investment in price reductions for the year.
Asda’s Co-owner Mohsin Issa emphasised their commitment to helping families save money amid a challenging economic climate.
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He explained: “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 focused on helping customers save money whenever they shop with us and this remains our key focus.”
Debt repayment and strategic growth
Asda confirmed the repayment of a £200m loan used for the Co-op’s convenience stores and forecourts acquisition last year. The retailer said this repayment was possible due to its “strong cash generation in the year to date, which reduces the retailer’s total debt leverage to 3.8x”.
Fashion and general merchandise dynamics
While Q3 witnessed Asda outperforming the clothing and general merchandise market, like other retailers, the unseasonal weather during this period impacted overall sales, resulting in a 3.4% decline in LFL sales year-on-year.
Despite these challenges, Asda showcased robust performance in key George categories such as Back to School, achieving its best-ever sales on school clothing with a 9% YoY increase. George Home exhibited a 5% YoY growth in the quarter.
The successful launch of the Stacey Solomon home collection in September was noteworthy, contributing to 70% of total online sales and marking the busiest day ever on the George Home website.