* Q4 like-for-like sales, ex fuel and VAT, down 0.1 pct
* CEO notes huge regional variations in consumer demand
* Does not expect situation to change much in 2014
By James Davey
LONDON, Feb 20 Britain's economic recovery is
fragile, with huge regional variations, the head of Asda
supermarkets said on Thursday as the company reported flat sales
over the key Christmas quarter.
Andy Clarke, chief executive of the British arm of U.S.
retailer Wal-Mart Stores, said he did not expect the
regional disparities to change dramatically in 2014.
"The economy is still fragile and so customers still feel
very fragile," he told reporters.
He said levels of disposable income were hugely dependent on
which part of the country consumers lived in.
"If you live in London and the south east and you've got 10
percent housing value growth then it feels very different than
if you are in the northeast or Northern Ireland, where
unemployment is still a big challenge," he said, noting an
unexpected rise in UK joblessness in data published on
Clarke was speaking after British finance minister George
Osborne warned on Thursday that Britain's economic recovery was
Asda, battling with J Sainsbury to be Britain's No.
2 grocery chain, said sales at stores open over a year,
excluding fuel and VAT sales tax, fell 0.1 percent year on year
for the 13 weeks to Jan. 3, its fiscal fourth quarter, although
it kept its gross margin steady.
The sales performance represented a slowdown from
like-for-like growth of 0.3 percent in the third quarter,
further illustrating how tough Christmas was for Britain's major
The UK's so called "top four" grocers, which also include
market leader Tesco and No. 4 Morrisons, are
struggling to hold their ground in the face of competition from
hard discounters Aldi and Lidl and
upmarket players Waitrose and Marks & Spencer.
Monthly data published last week by Kantar Worldpanel showed
the slowest industry growth since 2005. Household incomes remain
under pressure because inflation is still outstripping pay
Tesco and Morrisons both reported underlying sales falls for
the Christmas period, while Sainsbury's eked out a small rise.
Asda said in November it would spend over 1 billion pounds
($1.67 billion) on price cuts and product innovation and 250
million pounds on product quality, style and design over the
next five years.
"We're under no illusions as to the structural changes
facing our sector and that is why we took early action to look
at how we need to move our business forward," said Clarke.
He said the firm "invested" over 60 million pounds in the
fourth quarter to cut prices on basic items. In 2014, Asda plans
to set aside 200 million pounds for price cuts and invest 750
million pounds in store openings, extensions and refurbishment.
In 2013 Asda removed all short-term vouchering activity to
focus more on price.
"On all customers' minds is value and it is that value
equation - it's not just about price at any cost, it's the
combination of price and quality," said chief merchandising
officer Barry Williams.
"And they're becoming, in my experience, less and less
interested in gimmicks."
Wal-Mart on Thursday reported lower profit for the holiday
quarter as comparable U.S. sales fell again.