Asda cites ‘Brexit uncertainty’ as sales fall

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Asda

Asda has reported a fall in sales in the first six months of the year and warned about “uncertainty surrounding Brexit”.

Sales fell 0.3%, even though second-quarter sales rose after being boosted by Easter.

Asda boss Roger Burnley said consumer confidence was at a six-year low, “due in no small part to the ongoing uncertainty around Brexit”.

In April, the competition watchdog blocked its merger with Sainsbury’s.

Since the Competition and Markets Authority halted that deal, Asda’s parent company, Walmart, has said the supermarket business could eventually be listed on the stock market.

The figures are for like-for-like sales, which strip out changes to stores, and showed a 0.5% rise in the second quarter, when the late timing of Easter gave sales a boost.

That came after sales had fallen 1.1% in the previous quarter.

Mr Burnley said: “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.”

He added: “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.

“As a result, our non-food business has been challenged during the period. However, we’re satisfied that our food business has continued to perform well and our online growth continues to outpace the market.”

The figure were published just 24 hours after Asda workers marched in Leeds – where it has its headquarters – in protest at the details of a new contract.

Asda is offering staff a higher wage in exchange for a new contract that would introduce unpaid breaks and a requirement to work on bank holidays.

Mr Burney said: “We continue to work through our contract changes with colleagues and whilst we recognise that change is always difficult, we continue to believe this is the right and necessary approach for us to take in order to remain a sustainable business that delivers for customers.”

He was “under no illusions” about the challenging market and said he had to be focused on having the “most efficient operating model possible”.

Doug McMillon, the chief executive of Walmart, which is often described as the world’s biggest retailer, added the results “reflect the challenges faced by shoppers in this market as the uncertainty surrounding Brexit continues to loom”.

But he said Asda had outpaced rivals in online grocery sales.

Parent company Walmart reported a 3.4% fall in operating income in the first half to $10.5bn (£9.4bn).

In the US, it achieved five years of growth, unmatched by any other retail chain, and said it was ahead of its financial expectations for the year.

“We’re on track to exceed our original earnings expectations for the year, and that’s possible because of the work our associates do every day,” said Mr McMillon.