Asda releases Q2 results with continued focus on innovation

Today (15th August 2019), Walmart has published its earnings for the second quarter of 2019 including financial results for its UK business, Asda for the period 1st April to 30th June 2019.

 

Reporting a straight calendar quarter, which includes a benefit of the later Easter in 2019, the UK supermarket delivered a 0.5% like-for-like sales growth excluding petrol over the second quarter of 2019. This completed the first half year reporting for the UK’s third largest supermarket, capturing Easter in both years and saw like for like sales decline of 0.3% compared to the same period last year.

 

Speaking on the Walmart earnings call, Walmart CEO Doug McMillon commented on the UK market: “Turning to the U.K. our results for the quarter reflect the challenges faced by shoppers in this market as the uncertainty surrounding Brexit continues to loom. As the macro issues play out, we’ll continue to help customers navigate these times. We’re improving our price position over last year, especially with our private label products, as well as on-shelf availability. We’re also making progress on key strategic priorities such as online grocery where sales growth outpaced the market in Q2, according to Kantar.”

 

Walmart CFO Brett Biggs added: “Against a challenging backdrop in the U.K., Asda net sales increased 1.3 percent and comp sales increased 0.5 percent. While results benefited from the Easter calendar flip, Q2 comp sales faced stronger results in last year’s second quarter when unseasonably hot weather benefitted sales. Gross margin rate declined due to the mix impact of stronger fuel sales, soft sales in higher-margin general merchandise categories, strategic price investments and markdowns. These pressures were partially offset by strong expense leverage as cost savings initiatives offset cost inflation headwinds. Our focus remains on driving innovation and strategic priorities for customers, including growing online grocery and improving price gaps.”

 

Asda CEO and President Roger Burnley commented: “If ever a case study on the impact the mood of the nation has on UK spending habits were needed, this quarter has provided it. Consumer confidence levels are at an almost six-year low – due in no small part to the ongoing uncertainty around Brexit and amplified by the impact of weather and tracking against national sporting events in the same period last year. As a result our non-food business has been challenged during the period, however we’re satisfied that our food business has continued to perform well and our online growth continues to outpace the market.”

 

“Growth where customers care remains a key focus of our overall strategy and during the quarter we have continued to expand our award winning vegan range with 35 new products, extended our offer of mobile Scan and Go to 25 stores, invested £22m in refurbishing 9 stores and developed new partnerships – including extending our offer of Sushi Daily counters and working with Just Eat on trialing a 1 hour grocery home delivery service.

 

“We were delighted to win the Grocer 33 award on price for the 22nd year in a row and despite ongoing CPI pressures, we have continued to work hard on maintaining our strategic imperative to win on price by ensuring a basket of shopping from Asda delivers the best value for our customers’ week in, week out.

 

“We were also proud to open our fourth FareShare depot in Kent as part of our Fight Hunger Create Change programme, which is enabling FareShare and Trussell Trust to provide more meals and support to those dealing with food insecurity – as well as launching our first partnership with Warburtons on ‘You buy One, We give One’ which donates food to charities without any additional cost to customers.

 

“Whilst I remain proud of our continued strategic focus in the quarter, I am under no illusions as to how challenging this market remains for all retailers – and that we must continue to maintain our relentless focus on delivering a consistently trusted experience for our customers and having the most efficient operating model possible. We continue to work through our contract changes with colleagues and whilst we recognize that change is always difficult, we continue to believe this is the right and necessary approach for us to take in order to remain a sustainable business that delivers for customers.”