Asda profits rise as it manages to reduce Covid-19 costs

// Asda profits rise in first year under Issa brothers’ ownership

// The Big 4 grocer witnessed a 42% rise in operating profit to £693.1m in 2021

Asda has recorded a rise in profits in the first year under the Issa brothers’ ownership, as it managed to reduce its Covid costs.

The Big 4 grocer witnessed a 42% rise in operating profit to £693.1 million in 2021, compared to 2020 levels.

Asda said the increase was “predominantly due to a reduction in Covid-related costs”.

READ MORE: Asda expands loyalty scheme to 48 stores – full list of locations

The grocer has revealed initiatives such as giving 15,000 clinically vulnerable staff full pay for 12 weeks, hiring 22,000 temporary workers and offering home deliveries free of charge to shoppers who were shielding during the pandemic.

Total sales across the 12-month period inched up 0.5% year-on-year to £20.4 billion, while like-for-likes excluding fuel climbed 0.6%.

Asda attributed the gains to “strong performance” in home and outdoor categories and a return to growth within its George fashion business, following “pandemic-related disruption” in 2020.

Like-for-likes within Asda’s core grocery category fell 0.5% by comparison compared to 2020 levels. On a two-year basis, food like-for-likes rose 4.6%.

Asda said online sales dipped 5% during 2021 as lockdown restrictions eased. But it said demand for online grocer orders remained “significantly above pre-pandemic levels”, with sales up 75% compared to 2019.

The retailer delivered one million ecommerce orders in the week before Christmas 2021 and regained its position as UK’s second-largest online grocer by market share.

Despite that success, like-for-likes across the broader Asda business dropped 2.9% year-on-year during the golden quarter but were up 2.6% on a two-year basis.

Asda co-owner Mohsin Issa said: “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 by providing customers with exceptional value wherever and however they choose to shop with us.”

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