Clothing was major weak spot in Asda's Christmas sales

By

Sandra Halliday

Published
Feb 19, 2020

Walmart shared news this week of how Asda performed over Christmas and the story wasn't good. While that news wasn’t exactly detailed, we did hear that like-for-like sales fell 1.3%, excluding sales of petrol, in the ‘golden quarter’ (the last three months of the year). But worse than that was the news that the company’s clothing operation was particularly weak.

There was no specific number put on the decline in clothing but the fact that the company called out this area specifically shows that it must have been bad. 

Clothing is a key area for the supermarkets giant and it had been one of the pioneers in this category years ago with the introduction of its George range. But it now operates in a very crowded value fashion market and when economic times are tough, it suffers.

The company said that during the Christmas period, shoppers were extremely cautious and cited Brexit as an issue. Asda said margins suffered as the company had to cut prices on its already-low-priced clothing to shift it. 

CEO and president Roger Burnley said shoppers remained “highly budget conscious” and added that: "We know that our customers' mind sets during the quarter were cautious and whilst customers were enthusiastic for Christmas, they were more mindful in their spending – with many choosing to pare back gift lists and focus presents on kids rather than adults and extended family.”

It's not so long ago that Asda was facing the prospect of merging with Sainsbury's and their respective clothing operations being combined to create a value clothing powerhouse in Britain. But with that merger being prevented by the competition authorities last year, Asda has been left apparently as one of the weakest of the big four supermarkets in the UK.

Another issue for for business is what the future ownership of the chain might be. Walmart paid almost £7 billion for it back in 1999, but it has proved a disappointment in recent years and it had hoped that the Sainsbury's deal would be an answer to its problems. However, with German newcomers Aldi and Lidl taking market share quickly and with Amazon also entering grocery, while other retailers such as M&S and Waitrose work aggressively to boost their food operations, it remains a problem without a solution so far.