Asda Christmas sales dive as rivals step up

The Big Four grocer saw like-for-like sales drop 5.8% in the 13 weeks to January 1, while full-year like-for-like sales were also disappointing, falling 4.7 per cent.

The fourth-quarter sales drop was the steepest since the second quarter of last year when sales fell 4.7 per cent. The company - owned by US retail giant Walmart - said it had faced “fierce” competition in the grocery sector, which had put its market share “under pressure”.

The trading update came as the supermarket also revealed more details about its turnaround strategy after announcing it would invest £500 million into cutting prices last month. It said the first phase of the price cuts would come into force on Thursday through its Pocket More scheme, which aims to make Asda cheaper than Tesco, Sainsbury’s and Morrisons on 1,600 lines.

It also confirmed that it would use the investment to step up its battle against discounters like German rivals Aldi and Lidl.

Andy Clarke, president and chief executive of Asda, said that, amid the continued tough trading environment for grocers, the supermarket’s performance was “commendably stable” as some of its rivals had suffered “severe falls in profitability”.

He added: “We have steered a careful course through this very turbulent period for the industry and through a complex set of challenges.”

The sales drop for the fourth quarter was worse than analysts had expected and followed a tough period for the supermarket in the third quarter when like-for-like sales fell 4.5 per cent.

The Big Four supermarkets have come under increased pressure from German discounters Aldi and Lidl, which have carved out a slice of the UK grocery market and sparked a supermarket price war that has seen prices fall for more than a year.