Asda has said recent sales have been knocked by “temporary disruption” to product availability following its delayed IT systems upgrade.
However, boss Allan Leighton said he has seen a “clear improvement” in performance at the UK’s third-largest supermarket chain as it pushes forward with a major turnaround strategy.
The company said that, as of Thursday morning, it had finished rolling out its £1 billion Project Future upgrade of its IT systems in all stores and food depots, which Mr Leighton said was 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 said this work had led to “some temporary disruption with product availability” in stores and online, while it changes over from the old to the new system.
This is expected to have an impact on 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 said.
Mr Leighton, who returned to the business last year, 25 years after he was its chief executive, has led a major overhaul focused on cutting prices and improving availability on shelves in a bid to halt declining sales.
On Thursday, the Leeds-based retailer said it slowed down the rate that sales were declining over the latest quarter.
The supermarket chain’s total revenues, excluding fuel, decreased by 0.2% year-on-year to £5.3 billion in the three months to the end of June.
It came after revenues excluding fuel had dropped 5.9% in the first quarter of the year.
Compared like-for-like with the previous year, sales were also down 0.2% in the latest quarter, with the retailer claiming recent efforts to reduce price had helped improve its performance.
The grocer has been investing heavily in its Rollback programme of price reductions, as it seeks to win back market share from major rivals Tesco and Sainsbury’s, as well as growing German discounters Lidl and Aldi.
The average price reduction on those products is 22%, Asda revealed.
Mr Leighton said the price cuts were helping to draw in customers affected by food and drink inflation, which rose to 4.9% last month, official figures showed.
He said: “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 is expecting to return to like-for-like sales growth by the end of the year.
Asda previously warned that its investment in lowering prices would drive down profits in the short 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,” Mr Leighton said.
