Asda sales fall, clothing plummets as lockdown boost ends

By

Sandra Halliday

Published
May 27, 2022

Asda’s sales went into reverse in Q1 as the privately held supermarkets giant that owns the George clothing label suffered against tough comparisons with the year ago period and also from the cost of living crisis hitting home.

The company said that its like-for-like sales fell 9.2% in the first three months of the year up against an "exceptional period" in Q1 2021 when the UK was still in lockdown. That meant most shops were closed and supermarkets were among the few that were allowed to open.

It also meant that so-called non-essential items sold in the supermarkets received an artificial boost last year, given that consumers were otherwise only able to access such items online.

In the latest quarter, the result was that while food sales were down ‘only’ 7%, clothing sales plunged by 19.3% and general merchandise sales were down by an even worse 23.7%.

As well as the tough lockdown comparison, the company also cited the rising price of energy and food price inflation with household disposable incomes falling to the lowest figure for several years.

A YouGov Report earlier this week said that consumers are de-prioritising clothing against more essential items. It's unclear how such an environment will affect Asda and its George range long term. While its customers are likely to have less money to spend on clothing, the budget pricing of the George range could also mean that they shift their spending to the Asda offer from other, more expensive clothing stores.

As a response to the overall situation, the company has invested in expanding its new value range and keeping prices as low as possible. It's also planning to increase pay for staff in its shops from July this year.

Co-owner Mohsin Issa said: “The latest Asda Income Tracker highlights the stark reality facing millions of families in the UK right now with household incomes more squeezed than ever.

“Asda has a strong heritage of investing in price and customers can trust us to be on their side when they need it the most. We are investing in helping our shoppers manage the challenges of the here and now, as well as progressing critical strategic initiatives including loyalty, convenience and enhancing our in-store offering, which will all deliver long-term value.”