Asda profits fall 24% to £886m amid attempts to mitigate inflation

Asda has revealed its full-year profits declined 24% to £886m during the 52-week period ending 31 December due to its attempts to mitigate inflationary pressures for customers.

It revealed total sales (excluding fuel) increased by 0.1% year-on-year to £20.45bn amid a “strong upturn” in performance in H2, with like-for-like sales 5.1% up on the prior year, driven by price investments and new propositions to support customers with rising living costs.

Asda said that it dropped the price of more than 100 popular branded and own-branded lines by an average of 12% until the end of the year.

It also claimed to be the best performing traditional supermarket during the festive period, with sales up by 6.4% year-on-year in the 12 weeks to 25 December 2022 (Kantar), with the positive momentum continuing into 2023, with February like-for-like sales 6.8% up year-on-year.

Mohsin Issa, Asda’s co-owner, said: “Asda delivered a highly resilient performance last year. We took a conscious decision to support customers by investing heavily to mitigate the impact of inflation and keep prices as low as possible. Although this contributed to a decline in profitability, it was the right thing to do for our customers and will ultimately help to deliver long-term growth. We are pleased with the strong sales growth we saw H2, driven by investments in value and quality, and this positive momentum has continued into 2023 – with like-for-like growth of 6.8% in February.

“As well as tackling the issues of the day, we also made good progress laying the foundations to restore Asda to the number two position in UK grocery, focusing on giving customers desirable products at affordable prices and the ability to shop with us whenever and however they like.”

He added: “Last year saw challenges facing businesses and consumers alike and I am proud of the way Asda colleagues responded to support our customers and communities. They worked incredibly hard throughout the year to serve customers, keep prices in check and to launch new initiatives, like Just Essentials and Kids Eat for £1, to help customers save money.”