Pre-tax profits at Asda increased by 5.9 per cent in 2015 despite a slump in sales that resulted in the supermarket replacing its CEO in June this year.
During the year to December 2015 the supermarket’s overall sales fell by 3.7 per cent to £22.4 billion and like-for-like sales slipped by 4.7 per cent, according to the firm’s annual accounts published on Companies House.
Asda’s weak sales performance, which has continued in 2016, resulted in parent company Walwart replacing former chief executive Andy Clarke with Sean Clarke, the former head of its Chinese business, in June this year.
But it has emerged that even under its previous boss, Asda managed to boost its pre-tax profits by 5.9 per cent in 2015 to £974.9 million. This was acheived by shrinking its cost base as part of a five-year plan called “Project Renewal” to revamp Asda’s product range, modernise its 95 largest stores and reduce costs.
In the 2015 calendar year, the supermarket cut its wage and pension bill by 2.2 per cent to £2.3bn and axed almost 8,700 jobs, representing a 5 per cent cut to its workforce.
Wage savings were also made by decreasing the number of senior directors. The total salaries of top executives fell from £6.2m to £4.6m.
In addition, the supermarket chain made savings in procurement by dealing direct with more producers, as well as improving warehouse and transport efficiency, The Telegraph reported.
But Asda faces an uphill struggle to reverse its ongoing sales decline. In the face of fierce competition from discounters Aldi and Lidl, its sales fell by 7.5 per cent in the second quarter of 2016 – the retailer’s eighth consecutive slide in quarterly sales.
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