Asda sales growth accelerates in latest quarter

LONDON (Reuters) -British supermarket group Asda on Thursday reported an acceleration in underlying sales growth in its latest quarter and said Walmart was paid nearly 3 billion pounds ($4.3 billion) in dividends before selling most of the business.

Zuber and Mohsin Issa and private equity group TDR Capital completed their purchase of a majority stake in Asda from Walmart in February in a deal valuing the chain at 6.8 billion pounds.

The transaction, which sees Walmart retain a minority stake, is still subject to final regulatory approval by Britain’s competition regulator.

Asda said like-for-like sales, excluding fuel, rose 7.3% year-on-year in its first quarter to March 31, versus growth of 5.1% in the previous quarter.

The growth was driven by non-food categories and online shopping during a third period of national lockdown measures to stem the COVID-19 pandemic, which included the closure of non-essential shops.

Like-for-like clothing sales increased by 31% and general merchandise sales by 39%, with a rise in demand for outdoor furniture, BBQs and garden accessories. Total digital sales rose 88%.

“Whilst the closure of non-essential retail during the first quarter helped stimulate demand, our constant focus on keeping prices low, providing great quality products and developing in-store partnerships with … brands such as B&Q, The Entertainer and Greggs, continues to resonate with customers,” said CEO Roger Burnley, who is leaving the group next year.

Burnley said there are signs Asda customers are feeling much more optimistic about the future, noting almost 60% of those it recently surveyed said they are looking forward to a summer of socialising.

Asda also reported results for 2020, when it was under Walmart’s full ownership.

They showed that dividend payments were made to Walmart during the year comprising 1.65 billion pounds in cash and a dividend in specie (or reconciliation of inter-company borrowings) of 1.27 billion pounds.

Total sales, excluding fuel, increased 3.6% to 20.3 billion pounds, with like-for-like sales up 3.5%.

However, operating profit fell 16.7% to 486.5 million pounds, mainly due to COVID-related costs.

All three of Asda’s main British rivals – Tesco, Sainsbury’s and Morrisons have also reported big annual profit falls.

($1 = 0.7060 pounds)

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