NEWS

Asda reports 42% jump in 2021 operating profit

Published on: 29th March 2022

The supermarket’s operating profit for last year increased by 42% to £693.1m compared with £486.5m for 2020.

Asda has reported a 42% increase in its 2021 operating profit, mainly due to a reduction in Covid related costs from the previous year.

The figures were reported in a trading update covering Q4 and the financial year ending 31st December 2021. This covered the activities of Asda Group Limited which includes all Asda stores, online operations, clothing, general merchandise and fuel.

The supermarket’s Q4 performance was set against strong comparatives in the same period of 2020, which coincided with the UK’s second national lockdown in November and saw significant Covid-related restrictions in place during the Christmas period. As a result, like-for-like sales were 2.9% down compared with the same quarter of 2020, but remain 2.6% up on a two-year basis.

During 2021 total sales increased by 0.5% to £20.4b (2020 £20.3b) and by 0.6% on a like-for-like basis. The rise in sales was driven by a strong performance in home and outdoor and a return to growth in clothing after pandemic-related disruption in 2020.

Grocery like-for-like sales decreased by 0.5% in 2021 compared with 2020, when the UK spent most of the year under Covid-related restrictions, resulting in more meals being consumed at home. However, like-for-like grocery sales remained strong on a two-year basis, with growth of 4.6%.

In the online channel, sales decreased by 5% in 2021, as lockdown-restrictions eased, however, demand remains significantly above pre-pandemic levels with sales 75% up on 2019. In December, Asda hit its target to create one million delivery slots in the week preceding Christmas and has regained its position as the UK’s second-largest online grocer by market share.

Asda’s operating profit in 2021 increased by 42% to £693.1m (2020:£486.5m) compared with the previous year.

The rise in operating profit was predominantly due to a reduction in Covid-related costs compared with the previous year. These costs represent the significant investment Asda made in 2020 to keep colleagues and customers safe, including shielding 15,000 clinically vulnerable colleagues on full pay for 12-weeks, hiring 22,000 temporary colleagues to cover absences and manage increase demand, and providing 2.6m home deliveries free of charge to shielding customers.

During 2021, Asda continued to invest in its strategy to provide customers with more convenient ways to shop and give them more exciting reasons to visit stores.

In the trading update it also confirmed it will launch the largest budget-friendly essentials range in the market, ‘Just Essentials by Asda’ to help millions of families fight rising living costs.

Asda states that its priority is to improve the shopping experience in existing stores and help customers fulfil multiple shopping missions when they visit. Over the last 18 months Asda has collaborated with more than 40 different partner brands and has more than 1,000 partnership propositions across 400 stores. The focus for this year is to roll out the most successful partnerships which are ready to scale.

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