ASDA's low cost / low price strategy delivers market out-performance

ASDA has announced it had delivered its tenth successive quarter of outperforming the market with comp sales (like-for-like), excluding petrol, increasing 6.9% (up from 6% in Q2 and 5% in Q1). Sales growth continued to be driven by a combination of increased customer numbers (in particular AB shoppers) and higher basket spend.

Despite the tough trading environment ASDA grew total sales in the ‘high single digits' excluding petrol for the period up to 30th September. Figures published this week by TNS show ASDA is growing twice as fast as the UK market.

At a time when customers are increasingly price conscious, ASDA continues to drive its low cost agenda enabling it to fund lower prices for customers. As a result it has further strengthened its price advantage over its competitors.

ASDA's profit grew ahead of target with good cost control despite rising energy costs. The delivery of ASDA's sustainability programme has contributed to lowering operating costs as well as reducing its carbon footprint.

Food
ASDA has invested £30m in improving product quality with blind taste tests showing its own label products out-performing comparable products from premium-led retailers. This is one of the initiatives that resulted in strong food sales in the quarter particularly in fresh meat, chilled food and wine, satisfying the demand of higher demographic customers.

General Merchandise
General merchandise has outperformed all major general merchandise retailers over this period, with the strongest growth in Baby, Music, Video and Games. ASDA also had its best ever Halloween performance.

The ASDA Mobile network grew rapidly as the company threw down the gauntlet with the launch of the UK's lowest pay-as-you-go mobile tariff.

George
Sales of George outperformed a difficult market, with ASDA gaining share from its high street rivals (TNS World panel - 24 weeks to 14th September). This year George has simplified its ranges, significantly improved product quality and bought higher volumes of iconic products like the stunning £15 winter coat, £35 tuxedo and £12 little black party dress. George also launched its new marketing campaign this quarter focusing on using real people not highly paid celebrities.

Online
ASDA continues the rollout of its home shopping service, which now covers more than 90% of the UK population and is the UK's second biggest food home shopping business. ASDA's home shopping service is increasingly being chosen by more customers who are looking for great quality and outstanding value, but who may not have an ASDA on their doorstep. To meet demand this Christmas ASDA has increased the number of delivery slots by 40 per cent compared to 2007.

The supermarket also recently launched ASDA Direct, offering non food products to on-line shoppers across the UK.

Store openings
ASDA has opened fifteen new stores so far this year, including four new ASDA Living stores, with a further six stores due to open in 2008.

ASDA CFO, Judith McKenna commented: "This is another strong set of numbers. We have continued to grow volume and gain market share each quarter this year by focusing on giving our customers great quality and outstanding value at a time when they need them most. Our strategy of being the lowest cost to operate supermarket is the right one, and is helping us drive down prices.

"We are absolutely committed to making life easier for hard-pressed shoppers. We will continue to offer outstanding value for money across our entire range of food, general merchandise and clothing. As a result I am confident our stores are well set up to enable customers to have the best possible Christmas."