Asda boss bullish about next year

The true picture of Asda’s profitability is a closely guarded secret among parent Wal-Mart and its UK sister group’s executives.

This week, Wal-Mart said that Asda’s operating income was slightly above plan, but below last year for the third quarter to October 31, suggesting the fierce price war it has waged this year is having an impact on its bottom line.

On Wednesday, Bond gave a media briefing and declined to provide numbers, but said: “What Wal-Mart says is that, for the year to date, we are well ahead of profit plan.”

Understandably, he was more lucid talking about Asda’s operations and price strategy. In particular, he waxed lyrical about its online push in groceries and non-food.

Operationally, Bond said one of the biggest enhancements on its radar is its trial of replenishment software from supplier Galleria. He said that the biggest benefit that the software – which helps provide unique planograms for each store – will deliver is better availability on shelves.

Having upped its game over the past two years, Asda’s on-shelf availability is running at between 96 per cent and 96.7 per cent. Bond said the new system could take it up by about 1 percentage point, which can make a “huge” difference to total sales.

He was even more bullish about Asda’s online grocery and general merchandise push. This year, its online grocery sales are on track to hit£300 million and Bond said this could double next year, if it continues to deliver a similar level of like-for-like growth and extends home delivery to most of the population, as intended. “They will be significantly bigger next year,” he said.

He was even more bullish about Asda’s growth potential for non-food online, following the debut of its Asda Direct web site, catalogue and in-store collection desks, which launched in five stores last month. Bond said it was a question of when, not if, it will roll out Asda Direct to more supermarkets and Asda Living outlets.

In particular, Asda seems to have aimed its general merchandise price guns at catalogue giant Argos and value player Primark.

Asda’s boss claimed the supermarket chain was 12.8 per cent cheaper than Argos on 50 popular products and 25 per cent cheaper than Primark on certain products. “One of the myths is that they are the benchmark for value retailers,” he said.

On the overall health of the retail sector ahead of Christmas, Bond conceded that consumers were feeling pressed, but said he remained confident that Asda would have a strong Christmas. “I think there are pressures, but I do think that consumers are holding up. I certainly would not be writing off Christmas yet as problematic.”