Retailer competition
It’s been a fifth successive quarter of falling revenue at Asda, as CEO laments the “challenge” nature of the UK grocery market
Asda has seen like-for-like sales fall by 4.5% in the three months to the end of September, its fifth quarter of falling revenue.
In the previous quarter, Asda’s sales slumped 4.7%, marking its worst performance in its 50-year history.
The retailer said, sales volumes remained under pressure from discount supermarkets such as Aldi & Lidl.
Asda chief executive Andy Clarke said the UK grocery market continued to be “challenging”.
It is now the worst performing of the Big Four supermarkets.
Nevertheless, Clarke added that Asda had the “financial strength and clear plan to sustain us through this period, while we take appropriate and considered action to further strengthen our competitive position”.
Analysts say supermarket is moving in the right direction despite decline in sales over the latest quarter
Morrisons has insisted it is making “good progress” against its targets despite posting a sales decline in the latest quarter
Like-for-like sales excluding fuel fell 2.6% in the 13 weeks to 1 November, with the retailer pointing out that investment in lower prices brought 2.2% deflation in the period and 5.3% deflation on a two-year basis.
Morrisons also reduced the number of vouchers it accepted, whch hit third-quarter sales to the tune of 2.4%.
The company predicted that underlying pre-tax profit would be higher in the second half of 2015-16 than in the first, with net space sales growth of around 0.5% following the closure of 11 supermarkets and the sale of 140 M local stores.
Chief executive David Potts said: “The business is moving at pace on the long journey towards improving the shopping trip for customers. Our priorities for the rest of the year are unchanged – to stabilise trading, reduce costs and further improve the capability of the leadership team.
“We are making good progress in many areas and customers are noticing improvements.”
David Gray, an analyst at Planet Retail, said the numbers represented “limited progress”, but pointed out that it puts Morrisons behind key competitors Sainsbury’s and Tesco.
“Even so, credit must be given to Morrisons’ new management under David Potts for taking some tough but necessary decisions to protect the long-term profitability of the business – exiting convenience and the price comparison loyalty scheme, Match & More,” he said. “Both initiatives were a major cost and their removal will allow the chain to invest in the core proposition, hypermarkets and superstores. This after all is where Morrisons makes the vast majority of its sales and profits.
“Morrisons may be moving in the right direction under new management though this has yet to show in the numbers.”
Going forward, M&S has planned and targeted to concentrate on increasing food sales
Sales at Marks & Spencer have fallen for the six months to the 26th of September.
UK like-for-like sales fell by 0.4% for the period, and while sales of general merchandise, which includes the clothing division, were down by 1.2%, food sales rose by 0.2%.
The retailer said underlying profits rose by 6.1% to £284 million, although after taking into account one-off items, pre-tax profit fell 22.7% to £216m.
Those one-off items included almost £27m on revamping UK stores and £22m on European store costs.
M&S noted that it plans to concentrate on increasing food sales, gross margins and cash generation.
Retailer launches new price match scheme that compares with Aldi and Lidl as well as top four on branded and own-brand items
Morrisons has launched the first-ever price match scheme that compares with discounters Aldi and Lidl, as well as Tesco, Sainsbury’s and Asda.
The scheme, named ‘Match and More’, will refund any differences in price of comparable products as points onto cards, using price data from independent analysts Profitero.
The retailer said that if Lidl is 60 pence cheaper than Morrisons then 600 points are added to a shopper’s Match & More account.
It will launch as a phased roll-out starting today (3 October) and will be in stores in time for Christmas.
When 5,000 Match & More points are collected the customer receives a £5 voucher at the till, while shopper information from the cards will be collected and used to tailor future offers.
Morrisons CEO Dalton Philips said the retailer has learned from other price match programmes so customers will not collect lots of small vouchers or have to redeem them online when they get home.
“Because it price matches the discounters, the Match & More card will provide the ultimate guarantee about Morrisons’ value-for-money,” he said.
Morrisons said it also has plans to allow points to be redeemed as vouchers for leisure activities such as eating-out and travel.
Price matched products will cover branded and own-brand products as well as items that are on promotion elsewhere.