Brexit fears hit Asda as like-for-like sales fall 0.3%
Uncertainty over the outcome of Brexit has affected sales at Leeds-headquartered supermarket giant Asda.
While the supermarket delivered 0.5% like-for-like sales growth, excluding petrol, over the second quarter of 2019, overall like-for-like sales for the year’s first six months declined 0.3% compared to the same period last year.
The company’s owner, Walmart, has today published its earnings for the second quarter of 2019 including financial results for Asda for the period 1 April to 30 June 2019.
Asda CEO and President Roger 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.
“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 our food business has continued to perform well and our online growth continues to outpace the market.
“We have continued to expand our award winning vegan range with 35 new products, extended our offer of mobile Scan and Go to 25 stores, invested £22m in refurbishing nine stores and developed new partnerships – including extending our offer of Sushi Daily counters and working with Just Eat on trialing a one-hour grocery home delivery service.
“We were delighted to win the Grocer 33 award on price for the 22nd year in a row and despite ongoing CPI pressures, we have continued to work hard on maintaining our strategic imperative to win on price by ensuring a basket of shopping from Asda delivers the best value for our customers’ week in, week out.
“We were proud to open our fourth FareShare depot in Kent as part of our Fight Hunger Create Change programme, which is enabling FareShare and Trussell Trust to provide more meals and support to those dealing with food insecurity – as well as launching our first partnership with Warburtons on ‘You buy One, We give One’ which donates food to charities without additional cost to customers.
“While I remain proud of our continued strategic focus in the quarter, I am under no illusions as to how challenging this market remains for all retailers – and that we must continue to maintain our relentless focus on delivering a consistently trusted experience for our customers and having the most efficient operating model possible.”
Asda’s figures were published shortly after its workers marched in Leeds to protest at the details of a new contract.
The supermarket is offering staff a higher wage in exchange for a contract that would feature unpaid breaks and a requirement to work during bank holidays.
Burnley said: “We continue to work through our contract changes with colleagues and while we recognise change is always difficult, we continue to believe this is the right and necessary approach for us to take to remain a sustainable business that delivers for customers.”
Commenting on the UK market, Walmart CEO Doug McMillon said: “Our results reflect the challenges faced by shoppers in this market as the uncertainty surrounding Brexit continues to loom.
“As the macro issues play out, we’ll continue to help customers navigate these times. We’re improving our price position over last year, especially with our private label products, as well as on-shelf availability.
“We’re also making progress on key strategic priorities such as online grocery where sales growth outpaced the market in quarter two, according to Kantar.”
Walmart CFO Brett Biggs added: “Against a challenging backdrop in the UK, Asda net sales increased 1.3% and comp sales increased 0.5%.
“While results benefited from the Easter calendar flip, quarter two comp sales faced stronger results in last year’s second quarter when unseasonably hot weather benefited sales.
“Gross margin rate declined due to the mix impact of stronger fuel sales, soft sales in higher-margin general merchandise categories, strategic price investments and markdowns.
“These pressures were partially offset by strong expense leverage as cost savings initiatives offset cost inflation headwinds. Our focus remains on driving innovation and strategic priorities for customers, including growing online grocery and improving price gaps.”
