If Asda CEO Andy Clarke needed a little literary inspiration before facing the nation’s press today, a phrase or two from Rudyard Kipling would have fitted the bill.

Kipling’s famous call to “keep your head when all about you are losing theirs” seems particularly apt for Clarke today, whose resolute refusal to panic in the face of a 3.9% like-for-like first quarter sales fall was the main feature of Asda’s lunchtime press conference.

Dalton Philips and Philip Clarke have already been over-powered by the momentum of steadfastly poor like-for-like performance. But if Clarke has any such worries he hid them well today, content to play the long game.

“We are in a period of expected turbulence, not distress,” he said today. “We won’t buy short term sales at the expense of long term profitability.”

The message from Clarke was clear – competitors were chasing sales at the expense of huge reductions in profits, but Asda would not be drawn into that game and was continuing to prioritise the bottom line.

Clarke spoke with the assurance of a man who doesn’t have to respond to the daily share-price rollercoaster and the short-term outlook of many City investors.

“The difference with us is we’re in control of those strategic decisions” he said, “and we’re not being driven by issues outside of our business.”

But he did admit to taking “no pride” in the like-for-like fall, and neither he nor CFO Alex Russo could specifically recall a quarterly like-for-like performance with worse results.

So how much of Clarke’s defiance is confidence in Asda’s long-term position and how much is a touch of PR spin?

Shore Capital’s Clive Black backed Clarke’s contention that Asda had responded to the changing UK marketplace more quickly than its competitors. “Asda actually called the market more effectively than its superstore peers in the UK and took steps to meet the changing market conditions before its competitors too,” Black said. “Looking forward we expect Asda to stick to its knitting and this is the narrative from the company.”

Certainly Clarke – with his repeated references to being two years in to a five year plan – showed little inclination to shift from Asda’s existing playbook.

Russo’s contention that Asda’s balance sheet remains the strongest of the big four – with no property write-downs on the horizon unlike its listed competitors – backs up the idea that Asda is under no immediate pressure to take drastic action.

Asda is also dealing with tough year-on-year comparatives as it remained in growth until its third quarter last year – meaning the comparatives will become easier as the year progresses.

But its 3.9% like-for-like fall seems fairly strong evidence that the nascent recoveries of Tesco and Morrisons are beginning to bite. Clarke dismissed the idea Asda was a “victim” of Tesco’s resurgence, but Black expects it may look to sharpen its price file slightly in response to Tesco’s action on price.

This illustrates the tightrope Clarke must walk. While Tesco, Morrisons and, to a lesser extent, Sainsbury’s have newfound flexibility having re-based their profits, Asda is still committed to maintaining its levels of profitability which naturally inhibits its ability to win back market share.

Asda has made considerable strides in terms of operational efficiencies – not least the shedding of 1,460 jobs last year – but continued annual cost cutting can be difficult when seeking to maintain in-store standards, customer service and availability.

Clarke is right not to reach for emergency price cuts as Asda has previously weathered the threat of the discounters and the price war more convincingly than its competitors and has had the more consistent price file.

There is no doubt Walmart’s view can be longer term than the City, but its patience will not be inexhaustible and it is difficult to see how Asda can continue to maintain profits in the longer term without seeing sales and footfall stabilise.

Clarke vowed today to “hold our nerve” in terms of Asda’s five year plan. If he succeeds, his reward may not quite be “the Earth and everything that’s in it” but he’ll at least avoid the fate of two of his notable contemporaries.

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