Asda accounts have revealed that the supermarket suffered lower profits and a decrease in sales in 2016.
The Walmart-owned supermarket has been the victim of increased competition in the sector, as its figures confirm the poor performance that had been predicted. They saw their like-for-like sales fall by 5.7 per cent compared to the previous year, with pre-tax profits dropping 19 per cent, to around £791.7m.
“The grocery market has continued to experience low growth throughout the year and competition in the sector has remained intense. Our sales performance, relative to the market, was behind our expectations,” the company said.
While the vast majority of supermarkets have suffered from increased competition from the likes of Aldi and Lidl, Asda was impacted harder than any of its rivals. In May, Asda reported a fall in sales for the first quarter in 2017, the 11th consecutive quarterly fall.
Asda maintain that, despite the continually disappointing results, they have seen an improvement under new boss Sean Clarke. Clarke, who took over the role a year ago, has enacted dramatic price cuts in an attempt to recover from a period of decline.
Analysts have said that a major turnaround is required at Asda.
“Sainsbury’s and Tesco have always had more opportunity for differentiation from the discounters, but Asda has chosen to focus on price rather than range and in-store experience, which has clearly been the wrong strategy,” said Tom Berry, retail analyst at GlobalData.
“Asda has been flailing without direction for too long, and a comprehensive plan is needed if it is to survive in the highly competitive UK grocery market.”