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October 30, 2017

Change at the top for Asda might not be enough as poor results mount

By GlobalData Retail

Sean Clarke’s short spell as the boss of Asda in the UK will come to an end at the start of 2018, with former Sainsbury’s executive Roger Burnley taking over in an attempt to finally overturn a string of desperate results.

The move does not come as a major surprise, however, as Burnley had been widely tipped as a successor in waiting for the top spot at Asda UK when he joined in October last year as deputy chief executive.

Although Asda will want to this to appear a seamless handover, had sales picked up in earnest Clarke would not be out of a job.

While Asda’s second quarter set of earnings revealed a 0.7 percent rise in sales — its first positive like-for-like result in a staggering 12 quarters — in comparison to its competitors this was hardly a cause for celebration.

Clarke took the helm in July of last year with Asda in dire straits, having just announced a like-for-like sales decline for the sixth consecutive quarter, and seemingly unable to rebuff the aggressive expansion of supermarket discounters Aldi and Lidl.

Asda finishes 2016 with like-for-like sales down by 5.7 percent, followed by a 2.8 percent decline in the first quarter of 2017.

Meanwhile Morrisons ( up 2.6 percent last year), and Tesco and Sainsbury’s (both up 2.3 percent in 2016) all performing far better.

With consumer price inflation of 2.6 percent over the three months from April to June the main driver of Asda’s return to growth, rather than any real improvement in its proposition, Burnley is faces an uphill battle when he takes over.

The discounters are still leaching market share while diversifying their ranges and building trust amongst customers.

Top of Burnley’s to-do-list must be a revamp of Asda’s tired stores to bring them at least inline with its competitors and then find some way to stand out in the market — claiming to be the cheapest clearly won’t cut it any more for this one time budget supermarket.

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