Skip to main content
The Markets by Proactive
Go to Proactive UK
Proactive UK has moved. Proactive’s coverage of London’s small caps continues on proactiveinvestors.com Go there →
Advertisement
The Markets
by Proactive
Proactive UK has moved.
Coverage of London’s small caps continues on proactiveinvestors.com
Go to Proactive UK
The Markets
by Proactive
Proactive UK has moved.
Small-cap coverage continues on .com
Go to Proactive UK
Advertisement
The Markets
by Proactive
Proactive UK has moved.
Small-cap coverage continues on .com
Go to Proactive UK

Retail

Asda cuts prices by £500mln as supermarket wars intensify

US-owned chain slashes prices to keep up with discounters

Asda has thrown down the gauntlet to rivals with plans for another round of price-cutting to fend off pressure from discounters.

The Walmart-owned chain (NYSE:WMT) vowed to spend another £500mln by 2018 following its pledge in 2013 to spend £1bn over five years.

Asda and Morrisons have taken a particular hit from the rise of price-cutters such as Lidl and Aldi.

Asda boss Andy Clarke was reported as saying he expected 2016 to be another tough year for consumers, while low price inflation and online competition would also weigh.

"We must take radical action to win back our customers," Clarke was reported as saying.

Shore Capital's Clive Black said Asda was likely to have improved like-for-like (LFL) sales in the run-up to Christmas from the 4.5% fall in the third quarter.

Black said: "Whilst we are unlikely to see a Christmas trading update, we expect Asda's LFL sales over the festive period to have tickled better to, say, minus 3.0-3.5%."

Shore Capital said Asda was unlikely to give a post-Christmas update, although its main rivals are set to brief the market this week.

Sainsbury's , which reports on Wednesday, (LON:SBRY) has fared better than most in the battle against the discounters.

But analysts believe its third quarter LFL sales excluding fuel are likely to have remained in negative territory following a 1.1% decline in the second quarter.

Morrisons's (LON:MRW) trading update on Tuesday will cover nine weeks of its fourth quarter and after seeing an LFL fall in the third quarter of 2.6%, excluding fuel, the expectation is that performance in the fourth quarter will have been much the same.

Lastly, the wounded big beast of the sector, Tesco, (LON:TSCO) reports on its third quarter plus a bit of Christmas trading on Thursday, resulting in an update covering 19 weeks.

Data from market research group Kantar suggests UK LFL sales will have fallen, with the twin perils of food deflation and the hard discounters mostly to blame.

Keith Bowman at Hargreaves Lansdown said: "International sales are likely to have remained challenging, whilst a further underlining of management initiatives to improve company performance, including the closure of unprofitable stores, could be made."

Advertisement
The Markets
by Proactive
Proactive UK has moved.
Small-cap coverage continues on .com
Go to Proactive UK