ASDA and Sainsbury's face INVESTIGATION over massive £12 billion merger

Galtero Lara
May 18, 2018

Leeds-based Asda, which is proposing a £12bn merger with Sainsbury's, said like-for-like sales jumped 3.4 per cent in the first quarter, its fourth consecutive increase in sales.

Taking out the benefit of an early Easter, sales grew 1 per cent on a like-for-like basis, but the figures represent a year of positive sales growth.

Adjusting for an early Easter, which fell in the first quarter this year, like-for-like sales rises were more modest at just one per cent. We also launched 216 new own brand products including adding 29 to Free From, a range that is increasingly important to our customers.

Online sales accelerated at a rate of 8.3 per cent for grocery, but the star of the show was clothing, with sales on up 21.9 per cent.

Commenting on Asda's proposed merger with Sainsbury's, Walmart's president and chief executive Doug McMillon said: "We were pleased with the response of our colleagues in the United Kingdom... We continue to remain focused on improving the customer experience in our stores and providing value for customers by investing in lower prices".

The chain has been leading a turnaround in an attempt to improve sales amid a long-running supermarket price war, triggered by the onslaught of German discount operators Aldi and Lidl.

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Walmart-owned Asda is on course to merge with Sainsbury's in a £12 billion deal, which will allow it to further invest in lower prices. Sainsbury's CEO Mike Coupe has said the merger will produce £500m in cost savings.

Consumers have been promised cheaper everyday items, although it is not yet known where the price cuts will fall.

Experts expect the CMA to order the two companies to dispose of scores of stores as part of its review.

Asda has also been cutting jobs in the United Kingdom, including at its head office in Leeds, as part of a sweeping cost-cutting programme.

Asda's improved performance reflects moves by Mr Burnley to re-establish Asda's competitiveness by lowering prices, improving the availability and quality of its food and making its stores more attractive to shoppers.

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