Asda, the UK’s third-largest supermarket, said same-store sales grew by 1% over the fourth quarter, marking its seventh consecutive period of sales growth (Financial Times £). The company is owned by US retailer Walmart, but is set to be acquired by Sainsbury’s later this year, with Walmart owning a 42% stake in the combined entity. However, while the lift in sales demonstrates the extent of Asda’s turnaround from the 7.5% sales tumble it posted in 2016 - the worst in its history - its rate of growth has slowed compared with the previous quarter (Telegraph £). Roger Burnley, 52, Asda’s chief executive, said that 2018 had been “another challenging year for the retail market” and added the year ahead “looks no less turbulent, with uncertainties around Brexit playing on our customers’ minds (The Times £). Asda sales have been slowing as it awaits a crucial decision on its £14bn tie-up with Sainsbury’s (Daily Mail).
Walmart eased fears about the financial health of the US consumer on Tuesday when the country’s largest retailer disclosed its biggest rise in domestic sales for the holiday period in 15 years (Financial Times £).
“The transformation of Walmart is working,” writes the Financial Times’ Lex column (£). “Comparable sales were up nearly 7%, the retailer’s best performance in almost a decade. Walmart has embarked on a transformation to take on Amazon.”
“Sainsbury’s boss Mike Coupe has insisted his £10bn tie-up with rival Asda hasn’t been a distraction from trading,” writes Ashley Armstrong for the Telegraph (£). “But it’s fair to say that sales at both Sainsbury’s and Asda have come off the boil in the last quarter as they wait for the outcome from the nine-month regulatory process.”
UK frozen foods group Iceland said same-store sales were lower than expected in Christmas quarter, despite the publicity generated by its controversial “Rang-tan” advertisement (Financial Times £). Intense competition and weaker consumer sentiment in the 16 weeks to 4 January, meant sales fell 1% like-for-like, though new store openings meant that total sales were up 3.5%. Iceland may have generated a storm of publicity with a contentious Christmas advert that was banned for being political, but it was not enough to bolster trading for the frozen foods group during the all-important festive period (The Times £).
Fanfare surrounding its new vegan sausage roll boosted UK bakery chain Greggs in the opening weeks of 2019, prompting management to upgrade profit expectations for the year (Financial Times £). Greggs said it had experienced an “exceptionally strong start” to the year in the wake of the launch of the pastry last month (The Guardian, Daily Mail). The high street bakery chain said like-for-like sales grew 9.6% in the seven weeks to 16 Feb, while total sales soared 14.1% (Telegraph £). The shares rose by 179p, or more than 11 per cent, to a record £17.81 (The Times £).
French food group Danone said on Tuesday that its specialised nutrition and waters divisions drove like-for-like sales growth of 2.4% in the fourth quarter of 2019, to €6bn (Financial Times £). Overall sales for the full year of 2018 grew 2.6% on a like-for-like basis to €24.65bn, dragged down by the impact of a consumer boycott in Morocco.
General Mills and Mondelez have both stuck to their full-year financial forecasts, with both foodmakers pointing to the fruits of recent strategic plans that have been introduced there (Financial Times £). The two companies, like others in the food & beverage industry, are scrambling to reinvent themselves as consumer tastes shift towards more health-conscious snacks. They both raised prices within the past year for their North American products in an effort to claw back rising costs for raw commodities and freight.
The food sector is heading for a stomach-churning shake-up, with worries about excessive meat eating and greenhouse gas emissions from livestock presenting the industry with many fresh challenges, experts are warning (Financial Times £).
No comments yet