Asda has reported that recent sales have been impacted by "temporary disruption" to product availability due to a delayed IT systems upgrade.
However, CEO Allan Leighton stated that he has observed a "clear improvement" in the performance of the Ƶ's third-largest supermarket chain as it continues with a significant turnaround strategy.
The Leeds-based company announced that, as of Thursday morning, it had completed the roll-out of its £1bn Project Future upgrade of its IT systems across all stores and food depots, which Mr Leighton described as potentially the "biggest IT systems change, certainly in Europe, maybe ever".
"The cost is material, but largely that is now behind us," he said.
Asda noted that this work had resulted in "some temporary disruption with product availability" in stores and online, while transitioning from the old to the new system. This is anticipated to affect the supermarket chain's sales over the three months until the end of September.
"We've been doing 50 stores a week, every week, for 10 weeks. The collective scale of that does cause some friction, some of the systems don't run as fast as they should do., so that's where the impact has been," Mr Leighton explained.
Mr Leighton, who rejoined the business last year, 25 years after serving as its chief executive, has spearheaded a major overhaul centred on reducing prices and enhancing availability on shelves in an effort to reverse declining sales. On Thursday, the Leeds-headquartered retailer reported that it had reduced the pace at which sales were falling during the most recent quarter.
The supermarket group's total turnover, excluding fuel, fell by 0.2% year-on-year to £5.3bn in the three months ending in June. This followed a 5.9% drop in fuel-excluded revenues during the year's opening quarter.
On a like-for-like basis compared to the previous year, sales also declined by 0.2% in the latest quarter, with the retailer asserting that recent price-cutting initiatives had enhanced its performance. The grocer has been making substantial investments in its Rollback price reduction scheme, as it attempts to reclaim market share from leading competitors Tesco and Sainsbury's, alongside expanding German discount chains Lidl and Aldi.
Asda disclosed that the average price cut on these products stands at 22%. Mr Leighton stated that the price reductions were helping to attract customers impacted by food and beverage inflation, which climbed to 4.9% last month according to official data.
He commented: "Inflation is having an effect on people's buying behaviour, and that's why – particularly for our customer group, ordinary working people and their families – our price investment is working for us, because it makes a difference."
The supermarket anticipates returning to like-for-like sales growth by year-end.
Asda had previously cautioned that its investment in price reductions would suppress profits in the near term. "We saw a clear improvement in performance during the second quarter, with volumes and like-for-like sales strengthening, driven by better product availability and our material investment in price," stated Mr Leighton.
