Bottom Line: Asda's ongoing dirge

So adept has Archie Norman, chief executive of Asda, become in his role as prophet of doom for the grocery trade that the market is more than happy to believe the worst. Yesterday, that meant listening to his - slightly exaggerated - warnings about the continuing space race and its effect on prices and margins, rather than the more sotto voce promise to outperform his rivals.

That may be partly because Asda is already much further down the path to recovery than even it had expected. The 8.9 per cent increase in like-for-like sales has made last year a hard act to follow. Pressure on gross margins is unlikely to abate, and could intensify. The scope for cost- cutting, which meant that a 0.5 point fall in gross margins translated into an increase in the net from 4.5 to 4.7 per cent, is likely to be more limited.

The same is true of the dividend. While it is keeping out of the space race - selling space will hardly increase this year - refurbishing its outdated stores will still absorb cash. It will be cash- negative for at least three years, long after more expansionist, but higher-margin, rivals will have started throwing it off.

That said, the 4 per cent like-for- like growth analysts estimate it is currently achieving will be ahead of the sector, as will the likely 10 per cent rise in earnings to about 5.4p. The only point where it trails its rivals is in the prospective multiple of 9.7 times. It is likely to stay there until Mr Norman whistles a more optimistic tune.