Supermarket Giant Asda Sees Profit Decline Amidst Price Reductions and Merger Plans
- Asda reports a 10% drop in profits due to price cuts
- Like-for-like sales increased by 0.5% compared to a 5.7% decrease in 2016
- Asda opened new stores and shopping centers in 2017
- Proposed merger with Sainsbury’s may require selling at least 73 stores
- Asda CEO Roger Burnley: ‘Momentum returned driven by price cuts, quality improvements, and better shopping experience’
- Fourth consecutive quarter of growth in first quarter of 2018
Supermarket giant Asda has reported a 10% drop in profits for the full-year period up until December 31, 2017, attributed to investments in lowering prices to mitigate food inflation. Pre-tax profit fell to £712.6m (down from £791.7m) and operating profit decreased by 13% to £735.4m (from £845.3m). However, like-for-like sales increased 0.5%, compared with a 5.7% decrease in 2016. Asda also reported cashflow from operating activities of £1.2bn and net cash inflow for the year at £309.0m. The accounts confirm that Asda paid £128.4m corporation tax in 2017. In 2017, Asda opened one new ‘Home Shopping Centre’, three new superstores, and five new supermarkets, representing 146,000sq ft of new space. The news comes a month after the proposed £13bn merger with Sainsbury’s was revealed, which may require selling at least 73 stores to proceed. Asda CEO Roger Burnley stated that the company has seen a solid performance and strong management in 2017, driven by price cuts, quality improvements, and better shopping experiences both online and in-store. This momentum continued into the first quarter of 2018.
Factuality Level: 9
Factuality Justification: The article provides accurate information about Asda’s financial performance, including profits, like-for-like sales, and new store openings. It also includes a statement from the CEO regarding their strategy. The information is relevant to the topic and not sensationalized or misleading.
Noise Level: 3
Noise Justification: The article provides relevant information about Asda’s financial performance and strategic decisions, including profit drops, investments in lowering prices, store expansions, and a proposed merger with Sainsbury’s. It also mentions the CEO’s perspective on the company’s strategy. The content is focused on the topic without diving into unrelated territories and supports its claims with specific numbers and figures.
Financial Relevance: Yes
Financial Markets Impacted: Asda’s profits, corporation tax payment, potential store sales due to merger with Sainsbury’s
Financial Rating Justification: The article discusses Asda’s financial performance and its impact on the company’s profitability, as well as mentions a proposed merger with another company (Sainsbury’s) which could lead to selling stores. This directly relates to financial topics and has an effect on the companies involved.
Presence Of Extreme Event: No
Nature Of Extreme Event: No
Impact Rating Of The Extreme Event: No
Extreme Rating Justification: No extreme event occurred in the last 48 hours.
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