LONDON (Reuters) - Asda, the British supermarket business of U.S. retail giant Wal-Mart (WMT.N), reported an 11.5 percent drop in profit in 2016, a performance it said was “behind expectations”.
Of Britain’s big four supermarket players - market leader Tesco (TSCO.L), Sainsbury’s (SBRY.L), Asda and Morrisons (MRW.L) - Asda was hurt the most by the rise of discounters Aldi [ALDIEI.UL] and Lidl [LIDUK.UL].
Asda has said it was too slow in repositioning its business to respond to that competition.
Statutory accounts for Asda Group Limited, Britain’s third largest supermarket chain, published on Thursday showed an underlying operating profit of 1.08 billion pounds ($1.4 billion) in 2016, down from 1.22 billion pounds for 2015.
Revenue fell 3.2 percent to 21.7 billion pounds, with like-for-like sales down 5.7 percent.
“Our sales performance, relative to the market, was behind our expectations. However, in the last quarter of 2016, we saw an improvement following the changes made to our ranges and investment in price and service,” said Chief Financial Officer Alex Russo.
Asda also reported an operating cash flow of 1.41 billion pounds, an increase of 8 percent, and said a dividend of 450 million pounds was paid to Wal-Mart.
Wal-Mart veteran Sean Clarke, who returned to Asda as CEO in July last year, and former Sainsbury’s executive Roger Burnley, who started as chief operations officer three months later, have focused their turnaround efforts on the retail basics.
They have had some success, slowing the rate of Asda’s sales decline to 2.8 percent in the first quarter.
Second-quarter results are due to be published on Aug. 17.
Reporting by James Davey; editing by David Clarke