Asda reports sharp sales fall, chair blames government for 'killing consumer confidence'

Highlights

• Asda sales fall 3.8 per cent to £5.1 bn in three months to September, with comparable store sales down 2.8 per cent.
• Chair Allan Leighton blames IT system problems from separating technology from former owner Walmart.
• Leighton criticises government for hampering business investment and depressing consumer sentiment.

Total sales at Britain's third-largest supermarket fell 3.8 per cent to £5.1 bn in the three months ending September compared with the same period last year, reversing 0.2 per cent growth from the previous quarter. Comparable store sales dropped 2.8 per cent.

Chair Allan Leighton, who returned last year to revive the business for a second time, told the guardian that the fall in sales and market share was "totally self-inflicted." The supermarket struggled with technology issues during a lengthy effort to separate IT systems from former owner Walmart.

However, Leighton also attacked the government for hindering growth. "The country is stuck in reverse," he said. "They have got to encourage business to invest and they keep hampering that with costs."

He pointed that the retailers needed "a positive consumer" to "sell more stuff" but the government was "killing consumer confidence because of the fact there is no growth and nobody is investing

IT problems and recovery

The IT problems caused availability issues across the business, with clothing and homewares in over a quarter of stores affected by distribution centre problems. A new grocery home shopping app proved "more clunky than what we had before," Leighton admitted.

Asda's performance has declined since a debt-fuelled £6.8 bn takeover in early 2021 by Blackburn's billionaire Issa brothers and private equity firm TDR Capital. Aldi is poised to overtake it as Britain's third-largest supermarket, according to Worldpanel by Numerator analysts.

Leighton noted that the retailer had "made good progress" fixing IT issues, with availability back at appropriate levels. "It's all behind us now," he said, adding Asda was now between 4 per cent and 7 per cent cheaper than major competitors including Tesco and Morrisons.