Asda online sales double as stake sale talks continue

Asda, Walmart’s Leeds-based subsidiary, said its online sales doubled during its second quarter which began on April 1, the week after the pandemic lockdown began.

Asda CEO Roger Burnley said the pandemic created a “structural shift” in customer behaviour towards grocery shopping.

The news came as Walmart prepares to consider second bids from potential buyers — private equity firms — of a majority stake in Asda. 

“There will only be a third party investment in Asda if there is the ability to add something to our business and that Walmart and Asda conclude that it is the right option for growing Asda going forward with the right positioning for long term success,” Asda’s chief financial officer Rob McWilliam told Reuters.

“If that is where we land we know that Walmart is going to remain a committed shareholder in the Asda business and we believe that we’ll get the best of all worlds with what a third party investor can bring, what Asda brings and what Walmart continue to bring to the party.”

Asda’s attempt to merge with Sainsbury’s was blocked by the UK’s competition regulator last year.

Asked if Asda was now worth more than the £7.3 billion Sainsbury’s was prepared to pay, McWilliam said: “Time will tell.”

Bloomberg News reported in March that private equity firms Apollo Global Management Inc., Lone Star Funds and TDR Capital each submitted first-round offers for Asda earlier this year.

The second quarter saw Asda’s like-for-like sales excluding fuel, increase by 3.8% year-on-year.

“The supermarket also delivered record online sales in the quarter – seeing its online grocery sales double and click and collect sales quadruple during Q2, with transactional data showing that many of these new customers were new to Asda,” said Asda.

To meet the growing demand, Asda has increased its online capacity by 65% since March to 700,000 weekly slots and provided 1.4 million free of charge slots for “clinically vulnerable customers.”

“Recognising the increased and sustained appetite for online grocery shopping, Asda plans to increase its online capacity to 740,000 slots per week by the end of the year – and has set its sights on increasing capacity further still with to up to one million slots made available in 2021,” said Asda.

“The supermarket is also expanding its delivery partnership trial with Uber Eats to 25 more stores over the next eight weeks and has reinstated its same day and express click and collect service at more than 300 stores.

“This service was paused at the height of the pandemic to reduce pressure on stores.”

Walmart CEO Doug McMillon said: “Excluding fuel, Asda’s performance demonstrated the resilience of the business with growth in a challenging period.”

Walmart’s chief financial officer Brett Biggs said: “Excluding fuel, Asda comps were also solid with online grocery growing faster than the market.

“In the U.K., decreases in travel pressured Asda’s fuel sales.”

Asda CEO Roger Burnley, said: “The pandemic has created a structural shift in customer behaviours towards grocery shopping.

“We have accelerated our online capacity expansion to meet levels we had anticipated reaching in eight years within a matter of weeks and we will continue to expand this offer.

“We will also maintain focus on ensuring our in-store experience delivers what customers want from a shopping trip – great value, relevant range and ease.”

Asda said there was an increased demand in the quarter for children’s clothing, especially pyjamas, jogging bottoms, multi-pack shorts and t-shirts, as kids spent more time at home with their parents.

Sales of camping equipment was up 25% year-on-year.

Almost 40% of Asda customers said they have cooked or baked “from scratch” since the lockdown was introduced and 16% said they will continue to do so as restrictions ease.

The cost savings and health benefits of spending more time cooking at home has resulted in a quarter of Asda customers saying they will improve their diets and eat healthily post-Covid.

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Mark McSherry
Dalriada Media LLC sites are edited by veteran news journalist Mark McSherry, a former staff editor and reporter with Reuters, Bloomberg and major newspapers including the South China Morning Post, London's Sunday Times and The Scotsman. McSherry's journalism has also appeared in The Washington Post, The Guardian, The Independent, The New York Times, London's Evening Standard and Forbes. McSherry is also a professor of journalism and communication arts in universities and colleges in New York City. Scottish-born McSherry has an MBA from the University of Edinburgh and a Certificate in Global Affairs from New York University.