UK retailer Asda increased sales during the second quarter but saw profits fall due to costs linked to its acquisition of Netto’s local business.
The figures, which cover the trading period from 1 April to 30 June, revealed that like-for-like sales, excluding VAT, increased by 0.5%. Data from market researchers at Kantar Worldpanel said today (16 August) that food inflation was 5.2% in the 12 weeks to 7 August.
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Asda, owned by US retailer Wal-Mart Stores, said its footfall decreased by 1.2%, with customers consolidating their trips in the face of high fuel prices. The retailer said, however, that its average receipt rose by 1.7%.
Doug McMillon, president and CEO of Wal-Mart’s international operations, said the expense of Asda’s acquisition of 147 Netto stores hit operating income.
He said: “Asda had a solid second quarter, growing sales, excluding fuel, ahead of last year. However, operating income declined due to US$31m of costs related to Netto.”
McMillon said economic indicators suggested that 2011 would remain “a challenging year for our UK consumers” but he added: “We’re confident that Asda and its Netto store conversions are entering the second half of the year with good momentum, delivering availability and everyday low prices.”
In the last year, Asda has opened 13 new stores, excluding the converted Netto stores. To date, 61 Netto stores have been converted to the Asda Supermarket format, but only a handful had opened during Asda’s second quarter to the end of June.
