US retail giant Wal-Mart revealed today (22 February) that its biggest international unit, UK supermarket chain Asda, has failed to meet earnings targets following a disappointing fourth quarter.

Although international sales for the fourth quarter were US$18.4bn, up 9.6% over last year, Wal-Mart said “sales fell short of our dollar plan for the quarter and the year, primarily attributable to softer sales performance in the UK.” Asda accounts for around half of Wal-Mart’s international revenue.

“ASDA’s total sales were up in the low single digits for the quarter and the year and same store sales slightly negative for the quarter and the year. Sales and profit were below plan for the quarter and year,” the company said in conference call for analysts.

However, Asda has tried to put a positive spin on the results given the highly competitive retail environment tin the UK and reduced consumer spending. “We’re still the most consistent long-term out-performer in UK retail, but our 2004-5 performance hasn’t lived up to the high standards we set,” Asda spokesman Nick Agarwal told just-food.

As reported yesterday by just-food, in an attempt to boost lagging sales Asda will open 25 new stores throughout 2006, including six that will follow a new ‘discount/convenience’ format.

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“We have exciting plans to restore our business to the market out-performance we’re used to and we’re determined to be the ones to watch in UK retail over the next 12 months,” Agarwal said.

“We have a clear plan in place and we’re getting on with it.  I’d still make the point that overall we continue to grow sales (low single digits for 2005) profitably. For five years after Wal-Mart acquired us we grew market share and exceeded sales and profit targets. Despite a more challenging year in 2005, we continue to outperform the targets in Wal-Mart’s acquisition model, and remain a very successful and profitable business.”