Asda profits surge 42% as Covid disruption eases

Asda has reported its operating profits increased 42% year-on-year from £486.5m to £693.1m in FY21 following a reduction in Covid-related costs.

The company’s revenues for FY21, excluding fuel, increased to £20.42bn, up 0.6% year-on-year and up 4.3% on a two-year basis. Additionally, revenues in the fourth quarter (Q4), excluding fuel, grew 2.9% year-on-year to £5.43bn.

During FY21, total sales increased by 0.5% to £20.4bn and by 0.6% on a like-for-like basis. The rise in sales was reportedly driven by a “strong” performance in home and outdoor, and a return to growth in clothing after pandemic-related disruption in FY20.

The performance of Asda’s Extra Special range was the “highlight” of Christmas trading, with Extra Special sales in Q4 increasing 28% from the previous year, making it the fastest growing premium supermarket own-label brand.

Meanwhile, grocery sales decreased by 0.5% in the full year compared with FY20, when the UK spent most of the year under Covid-related restrictions. However, like-for-like grocery sales grew 4.6% on a two-year basis.

Online sales also fell by 5% in FY21 as lockdown-restrictions eased, however, demand remains above pre-pandemic levels with sales up 75% on FY19.

Additionally, Asda has confirmed it will launch the “largest budget-friendly” essentials range in the market to help families fight rising living costs. ‘Just Essentials by Asda’ comprises 300 products which will arrive in store from May and will be rolled out across the summer.

The new range will span all “key” categories including fresh meat, fish and poultry, bakery, frozen and all cupboard staples. It will also include more than 20 essential household and toiletry products including washing-up liquid, toilet roll, laundry powder, shampoo and conditioner. Asda will stock the full range in all 581 food stores, as well as online.

Mohsin Issa, Asda’s co-owner, said: “We understand that customers are increasingly worried about the cost of living and want help to keep their grocery bills in check, whilst still being able to buy healthy and nutritious food for their families. Our new ‘Just Essentials’ range has been specifically designed with this in mind.

“When we bought Asda we were clear that we wanted to grow this great business and our ambition is for Asda to regain its position as the UK’s second largest grocery retailer. We are pleased with the progress made in the six months since we officially took over the business and are confident we can achieve this long-term ambition.”