Asda suffered a major blow to its position as one of the only Big Four supermarkets to be successfully competing against the growth of rival discounters Aldi and Lidl as the grocer revealed the speed of its falling sales increased.
Chief executive Andy Clarke warned the market remained “in one of its most challenging and changeable periods in history” as he revealed sales in the 12 weeks to January 4 sales dropped 2.6%.
It means sales for the whole year fell 1%.
To tackle the changing landscape, which has seen shoppers shift to online or convenience store shopping, rather than making a weekly trip to supermarkets, Clarke said he would invest £600 million in new stores and overhauling older ones.
He said 17 new sites would open this year - the same as 2014 - including three new London stores.
Click and collect has also grown, and Clarke revealed 150 new remote click and collect sites will also be built.
However, talks of opening convenience stores to take on Tesco, Sainsburys and Morrisons, which all have small high street stores, still remain a pipe dream for Asda.
The company was credited for spotting the rise of discounters and shoppers' demand for cheaper groceries, announcing a £1 billion investment to cut margins and prices.
Bosses pointed out that in the last year it invested £300 million in price cuts - £100 million more than previously announced.
