Photographer: Simon Dawson/Bloomberg

Asda Sales Drop Worsens as Grocer Is Hurt by Tesco Recovery

  • Wal-Mart unit `not a business in financial crisis': Clarke
  • CEO sees discounters controlling 15% of U.K. grocery market

Asda, the U.K. supermarket chain owned by Wal-Mart Stores Inc., swatted away concern over its deteriorating performance after its declining sales went from bad to worse.

“We are not a business in financial crisis,” Chief Executive Officer Andy Clarke said at a press conference in London Thursday, after the grocer reported a 5.8 percent slide in like-for-like sales in last year’s final quarter.

Already grappling with the longstanding encroachment of discounters Aldi and Lidl, Asda has more recently been on the receiving end of a fightback by market leader Tesco Plc. Clarke said the grocer didn’t foresee the extent of the recovery at Tesco, which had its first sales growth in more than four years during the holiday quarter. He also forecast no let up in the competitive landscape.

“We expect 2016 to be as challenging as 2015,” Clarke said. He expects market-share gains by Aldi and Lidl to continue, forecasting that the discounters will ultimately control about 15 percent of the U.K. grocery market. They currently have about 10 percent.

Asda will continue to cut prices and wants them to get to within 5 percent of the discounters, Clarke said. A new campaign was introduced Thursday under the ‘Pocket More’ banner, which Asda said will give it the lowest price on an additional 1,600 products compared with Tesco, J Sainsbury Plc and Wm Morrison Supermarkets Plc.

Asda’s declining sales are just one difficulty for Wal-Mart. The world’s largest retailer lowered its annual sales forecast Thursday after the strong dollar pulled down the value of overseas revenue.

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