British supermarket group Asda reported on Tuesday that it had experienced stronger like-for-like sales in the second quarter. This upswing was primarily attributed to increased demand for more economical alternatives to branded grocery products, driven by the current cost-of-living crisis.
Excluding fuel, comparable sales surged by 9.6% in the quarter ending on June 30th, with revenue reaching 5.4 billion pounds ($6.87 billion), according to Asda’s announcement.
Asda, the third-largest grocer in Britain, following market leaders Tesco and Sainsbury’s, has implemented price reductions on certain items, focusing particularly on its own label products. Additionally, in the past year, the company introduced “Just Essentials,” a value-oriented product line aimed at catering to individuals facing stringent budget constraints.
During the second quarter, sales of the “Just Essentials” line experienced a remarkable surge of 87%, while there was a notable 14.7% uptick in sales of the own-brand products.
Owned by siblings Zuber and Mohsin Issa, alongside private equity firm TDR Capital, Asda continues to grapple with inflation affecting certain components of its cost structure. However, Chief Financial Officer Michael Gleeson emphasized that the company has managed to transfer the benefits of reduced commodity prices, such as milk and wheat, directly to consumers, as stated in an official statement.
Amidst a surge in living expenses that commenced last year, triggered primarily by a steep rise in energy costs, a significant number of British households continue to navigate financial constraints within their limited budgets. This surge in inflation marked 40-year highs, underscoring the ongoing challenges faced by many.
Although there has been a subsequent alleviation in price hikes, they persist at an annual pace surpassing 7%, which, from a historical perspective, remains elevated. This rate stands as the highest among the world’s leading seven affluent economies.
Asda reported that over 5 million customers have now become regular users of its Asda Rewards loyalty application.
Furthermore, it stated that the progress of a 2.3 billion pound transaction to acquire the majority of the UK and Ireland business of petrol station operator EG Group remains on course for completion in the fourth quarter.
