Supermarket chain Asda urges caution over extent of UK recovery

The green shoots of recovery in London and the southeast are not being felt across large parts of the UK, the supermarket chain Asda has warned, in a note of caution on the economic outlook.

Andy Clarke, chief executive of Asda, which vies with J Sainsbury to be Britain's second biggest supermarket chain by market share, warned that a recovery in London and the southeast did not equate to an upturn across the country.

While there were signs of improvement in the UK economy, it remained "very fragile" and susceptible to shocks such as the weather.

While consumers in London and the southeast were enjoying growth in the value of their housing, "it feels very different if you are in the northeast and Northern Ireland, where unemployment is still a big challenge," Mr Clarke said.

In some parts of the country there was also a "different economy" due to the effects of flooding.

Mr Clarke said that overall "the consumer continues to be very cautious about spending."

He said he had been making the point to the government on the problems of a divided economy, and he believed it was listening.

"We have seen an increase in the amount of correspondence between us and MPs," he said.

The greater buoyancy of the southeast is prompting Asda, whose traditional heartland is in the north of England, to embark on a big push in the region through stores and online. Some 97 per cent of the new stores acquired in the future will be in London and the southeast.

Mr Clarke also said that costs were rising in Scotland ahead of the vote on independence.

"The cost of doing business in Scotland is going up, so managing that cost increase is something that is a challenge for us, and for customers in Scotland, whichever way the vote goes," he said.

Ακολουθήστε το Euro2day.gr στο Google News!Παρακολουθήστε τις εξελίξεις με την υπογραφη εγκυρότητας του Euro2day.gr

FOLLOW USΑκολουθήστε τη σελίδα του Euro2day.gr στο Linkedin

The comments came as Asda's sales from stores open at least a year fell by 0.1 per cent in the its final quarter to January 3, as it ditched money-off coupons in order to offer customers lower prices on staples such as cucumbers, milk and bread.

Sales from stores open at least a year rose by 0.5 per cent in the full year.

Asda said its decision to ditch vouchers and to cut prices had depressed its top line sales. However, it said the volume of products sold had increased.

Barry Williams, chief merchandising officer, said ditching vouchers meant Asda's performance did not have "artificially stimulated levels of demand in it".

© The Financial Times Limited 2014. All rights reserved.
FT and Financial Times are trademarks of the Financial Times Ltd.
Not to be redistributed, copied or modified in any way.
Euro2day.gr is solely responsible for providing this translation and the Financial Times Limited does not accept any liability for the accuracy or quality of the translation