According to The Times, like-for-like sales fell by 4.7 per cent in the second quarter after a 3.9 per cent slide in the first quarter.
The company, which employs 160,000 staff, also warned that it would take a hit of “a few tens of millions” from the government’s introduction of a new national living wage from next April.
Alex Russo, Asda’s chief financial officer, said that the cost was likely to push prices higher.
The results come after a difficult period for Asda as it was overtaken in the second quarter by Sainsbury’s as the UK’s second biggest supermarket chain, behind Tesco, for only the third time in 12 years, according to figures last month from Kantar Worldpanel.
Andy Clarke, a former store manager who has been Asda chief executive since 2010, said that the group had reached its “nadir”, but insisted that it was a short-term issue.
The Leeds-based supermarket chain blamed an “impulsive” market and “more promiscuous” customers drawn by competition from low-cost rivals such as Aldi and Lidl.
“We continue to navigate a steady course through the worst storm in retail history, despite another challenging quarter,” Mr Clarke said. He also quashed speculation that he was about to leave, saying: “I’m here to stay.”
Asda’s poor performance was blamed by its parent company Walmart as a key factor behind falling profits and a decision to slash its earnings guidance for the year. Currency headwinds and a decision to raise pay and increase worker hours in a drive to improve customer service were also blamed for worse-than-expected earnings.
Shares in Walmart, which last month surrendered the crown of world’s biggest retailer to Amazon, slipped by 3.1 per cent on Wall Street as first-quarter profit fell 15 per cent to $3.48 billion. They are down 16 per cent this year.
Dave Cheesewright, president and chief executive of Walmart International, said on an analysts’ call that, excluding fuel, Asda’s same-store sales were down 5.2 per cent, as customers deserted its outlets.
He said that Asda would continue to pursue aggressive cost cutting initiatives supporting a £1 billion, five-year price investment strategy, which includes job cuts. In an attempt to build “brand and quality” Asda would be importing Walmart’s famous “Save Money, Live Better” slogan, he added.
Clive Black, an analyst at Shore Capital, said he was “surprised” by Asda’s poor performance, adding: “It hasn’t done much wrong in our view but the shoppers don’t think that way. We continue to scratch our heads on this matter . . . we cannot remember such weak same-store sales from the group in recent times.”
