Asda Quarterly Same-Store Sales Drop Amid Shift to Discounters

Asda, the U.K. supermarket chain owned by Wal-Mart Stores Inc., reported weaker fourth-quarter revenue amid a slowing grocery market and a shift by consumers toward discounters such as Aldi and Lidl.

Sales at stores open at least a year fell 0.1 percent, excluding fuel and value-added tax, in the 13 weeks ended Jan. 3, the Leeds, England-based retailer said today in a statement. That compares with the previous quarter’s 0.3 percent growth. For the year, same-store sales increased 0.5 percent, less than the previous year’s 1 percent gain.

Asda, whose position as the U.K.’s second-largest grocer is being challenged by J Sainsbury Plc, said in November it will take on the discounters by investing 1.25 billion pounds ($2.1 billion) on price and quality improvements, seeking to halt the German budget chains’ erosion of market share for the big four grocers. Britain has become more polarized in its shopping habits towards bargain and upscale stores.

“There’s little doubt that the U.K. retail market is undergoing significant and permanent structural change,” Asda Chief Executive Officer Andy Clarke said in the statement. “Though the economy is showing signs of recovery, it is still susceptible to shocks and the benefit is not yet being felt right across the country.”

Aldi, Lidl and the upscale Waitrose chain gained more than 1 percentage point of market share over the past year, and now account for a combined 12.2 percent of the U.K.’s grocery market, Kantar Worldpanel figures showed Feb. 11. Asda’s share dipped to 17.3 percent in the 12 weeks ended Feb. 2, from 17.7 percent a year earlier, while larger rival Tesco Plc saw its share decline to 29.2 percent from 30 percent.

Before it's here, it's on the Bloomberg Terminal.