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UK's Asda Says Brexit Uncertainty Affecting Customers

Published on Aug 15 2019 1:40 PM in Retail tagged: UK / Walmart / Asda / Quarterly Reports

UK's Asda Says Brexit Uncertainty Affecting Customers

Asda, the British supermarket arm of US retail giant Walmart, said uncertainty surrounding Brexit was affecting its customers as it eked out a small rise in second quarter sales, helped by the later timing of Easter this year.

Britain's new prime minister Boris Johnson has promised to take Britain out of the European Union by 31 October, with or without a deal, setting the scene for a showdown in parliament where lawmakers are opposed to a divorce without a transition agreement.

Asda, whose proposed takeover by rival Sainsbury's for £7.3 billion (€7.95 billion) was blocked by Britain's competition regulator in April, said on Thursday its like-for-like sales rose 0.5% in its fiscal second quarter to 30 June.

That compares with a decline of 1.1% in the previous quarter, or a rise of 0.5% adjusted for the later timing of Easter this year.

"If ever a case study on the impact the mood of the nation has on UK spending habits were needed, this quarter has provided it," said Asda chief executive, Roger Burnley.

"Consumer confidence levels are at an almost six-year low – due in no small part to the ongoing uncertainty around Brexit and amplified by the impact of weather and tracking against national sporting events in the same period last year," he said.

Divisional Performance

Burnley said that while Asda's food business "performed well" and online growth outpaced the market during the period, its non-food business was "challenged".

Asda said its gross profit rate declined, reflecting increased fuel sales with lower margins, soft demand for higher-margin general merchandise and price cuts.

Industry data published last month showed all of Britain's big four grocers - market leader Tesco, Sainsbury's , Asda and Morrisons - saw total sales fall in the 12 weeks to 14 July.

The dip reflected a heatwave and the men's soccer World Cup a year earlier which boosted demand.

News by Reuters, edited by ESM. Click subscribe to sign up to ESM: European Supermarket Magazine.

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