- Finals steps of ‘Project Future’ have caused ‘temporary disruption’
Asda has revealed another dip in sales as its chairman warned of further pain ahead due to a botched IT transformation.
Allan Leighton insisted his plan to revive the troubled supermarket is on track, even as recent stock availability issues and soaring food inflation weigh on the group.
The UK’s third biggest grocer said the final steps of its long-awaited £1billion ‘Project Future’, which separated its IT systems from those of former owner Walmart’s, caused ‘some temporary disruption with product availability’.
This ‘will impact our sales outturn in the current quarter,’ the business admitted.
Leighton said it was too early to tell the damage to current trading but insisted ‘we’re on the right side of this’.
‘I don’t mind taking a bit of noise, a bit of friction, to get it done, frankly, because just getting it done in itself is a hell of an achievement,’ he said.
But bosses pointed to signs of green shoots on Thursday, as sales for the three months to 30 June fell 0.2 per cent to £5.3bn compared to last year.
Asda chair Adam Leighton says IT upgrade caused ‘some temporary disruption with product availability’
This was a slowdown in the rate of decline after sales slumped 5.9 per cent in the first quarter of the year.
Defending his turnaround plan, he said Asda is ‘where I’d expect to be at this stage as we rebuild the business’.
And he said the group was nine months into what could be a three- to five-year revival mission and ‘we still have got a long way to go’.
Asda’s market share has shrunk since its takeover four years ago by private equity firm TDR and the billionaire Issa brothers.
Retail veteran Leighton, who returned last year having been chief executive from 1996 to 2001, has been slashing prices to compete with rivals including discounters Aldi and Lidl.
Signs of a supermarket price war have emerged even as food inflation has surged, hitting 4.9 per cent last month.
Leighton said that higher costs were ‘no doubt…hitting the pocket of the consumer,’ and said ‘there’s more gloom than we’ve seen for a long time’.
But he said: ‘I don’t see [rising inflation] affecting the turnaround, but I don’t see it as particularly helpful for the industry or the consumer as a whole.’
Asda was among more than 60 retailers to last week sign a letter warning the Chancellor that further tax rises would threaten Brits’ living standards.
Retailers have been hit by a £7billion increase in annual costs after Rachel Reeves hiked employer National Insurance Contributions and the minimum wage.
Industry figures last week revealed it to be the worst-performing major supermarket over the three months to 10 August.
Sales fell 2.6 per cent to £4.22billion over the period, making it the only grocer to see sales plunge, apart from the Co-op which saw a 3.2 per cent drop.
Its market share has fallen from 12.7 to 11.8 per cent in the past year, market researcher Worldpanel said.
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