ASDA Reports 3.8% Rise In Q2 Sales

Asda and Walmart have today published their second quarter earnings covering the period from 1st April to 30th June 2020.

The trading quarter, which began the week after lockdown was imposed across the UK on 23rd March, saw Asda’s like-for-like sales excluding fuel, increase by 3.8% year-on-year.

The supermarket also delivered record online sales in the quarter – seeing its online grocery sales double and click and collect sales quadruple during Q2, with transactional data showing that many of these new customers were new to Asda.

To meet the growing demand, Asda has increased its online capacity by 65% since March to 700,000 weekly slots and provided 1.4 million free of charge slots for clinically vulnerable customers.

Recognising the increased and sustained appetite for online grocery shopping, Asda plans to increase its online capacity to 740,000 slots per week by the end of the year – and has set its sights on increasing capacity further still with to up to one million slots made available in 2021.

The supermarket is also expanding its delivery partnership trial with Uber Eats to 25 more stores over the next eight weeks and has reinstated its same day and express click and collect service at more than 300 stores. This service was paused at the height of the pandemic to reduce pressure on stores.

Commenting on Asda’s performance in the global quarterly earnings call, Doug McMillon, CEO and President of Walmart said; “Excluding fuel, Asda’s performance demonstrated the resilience of the business with growth in a challenging period.”

Brett Biggs, Walmart’s Chief Financial Officer added; “Excluding fuel, Asda comps were also solid with online grocery growing faster than the market. In the U.K., decreases in travel pressured Asda’s fuel sales.”

Asda CEO and President, Roger Burnley, said: “The pandemic has created a structural shift in customer behaviours towards grocery shopping. We have accelerated our online capacity expansion to meet levels we had anticipated reaching in eight years within a matter of weeks and we will continue to expand this offer. We will also maintain focus on ensuring our in-store experience delivers what customers want from a shopping trip – great value, relevant range and ease.”

Protecting health and family were the key focus for customers during the quarter. Whilst the demand for clothing declined, parents continued to prioritise their children and there was an increased demand for children’s clothing, especially pyjamas, jogging bottoms, multi-pack shorts and t-shirts, as kids spent more time at home with their parents.

Towards the end of the quarter, as lockdown measures were adjusted, and customers felt reassured by the extensive safety measures introduced in stores, price and value returned to the fore and customers travelled further to save money on their weekly groceries.

And although fuel sales decreased significantly as lockdown was imposed – the gradual easing and return to work for many in August has seen motorists return to the pumps and fuel volumes return to around 90% of pre-Covid levels – however customer spend at the pump remains down year on year.

The combination of restrictions on foreign travel and tighter budgets has also seen many customers opt for ‘staycations’ this summer, with sales of camping equipment up 25% year-on-year.

Looking ahead to the second half of the year, finances remain a key concern for consumers as the economic consequences of the pandemic become more apparent.

In a recent survey, almost half of Asda customers said they expect their household incomes to decline during the next 12 months, whilst the latest Asda Income Tracker showed that family spending power decreased by 2.2% in the year to June to £211 per week – the steepest fall in seven years.

But as well as increasing concerns around their finances, customers are also recognising positive changes resulting from the pandemic.

Almost 40% of Asda customers said they have cooked or baked from scratch since the lockdown was introduced and 16% said they will continue to do so as restrictions ease. The cost savings and health benefits of spending more time cooking at home has resulted in a quarter of Asda customers saying they will improve their diets and eat healthily post-Covid.

Customers continue to see themselves spending more time at home due to the pandemic, and spending on small, affordable luxuries for the home and indulgent treats is predicted to continue. Geroge Home sales are growing 13% ahead of the market, while Asda’s premium Extra Special range has outperformed the market with a sales uplift of 19.4% year-on-year.

Roger Burnley said: “As life under Covid 19 continues, customer concerns are shifting from the health consequences of the pandemic to its financial impacts – and we remain absolutely committed to protecting both their health, and their budgets.

“Our Asda heritage is anchored in providing the best value on a basket of shopping – be that online or in store – and with the convenience of meeting a range of customer needs under one roof and we remain absolutely focused on delivering this strategy.”

When lockdown was implemented Asda immediately responded by introducing extensive measures to protect colleagues, customers and help feed the nation.

These included installing Perspex screens and one-way directional systems and limiting the number of customers in stores. Asda also recruited 23,000 new temporary colleagues into stores to ensure it could continue serving customers during the height of the pandemic.

In addition, whilst Asda did not access the Government’s furlough scheme, it did move to protect its colleagues by offering more than 10,000 extremely clinically vulnerable and vulnerable colleagues the opportunity to shield at home on full pay for 12-weeks.

The supermarket also opened up ‘Priority’ delivery slots for 190,000 clinically vulnerable people, made 3500 slots available for small care homes and provided 250000 medical grade masks to care workers, as well as a £5m donation to FareShare and the Trussell Trust to support their work.

Roger Burnley concluded: “During this period, our store and depot colleagues worked tirelessly to support customers and keep them safe and I was proud to offer them a well-deserved bonus in June to thank them for their efforts. We responded swiftly and extensively to do the right things to protect our customers, colleagues and communities – keeping our prices low, investing in our colleagues and communities and ensuring our stores and online offer adapted to meet customer needs and concerns.”

Source : ASDA

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