Thursday 14 November 2019 2:41 pm

Asda blames sales slump on Brexit uncertainty

Asda said Brexit uncertainty is negatively affecting consumer spending as the supermarket giant reported a dip in sales in the third quarter.

Like-for-like sales, excluding petrol, fell 0.5 per cent in the third quarter as Brexit and the upcoming general election ramped up the levels of uncertainty.

The grocer said its gross profit rate fell due to price reductions in its clothing division following a softer summer season compared to last year.

The fall in gross profit rate, along with increased operating expenses, meant operating income was also lower.

Asda chief executive Roger Burnley said: “This quarter has afforded consumers little respite from political or economic uncertainty and this has shown in their spending.”

Doug McMillon, chief executive of Asda’s parent company Walmart, which also reported quarterly earnings today, said: “In the UK, concerns over Brexit continue to negatively affect customer spending patterns.”

Walmart reported that revenue increased 2.5 per cent to $138m, while operating income sank 5.4 per cent due to a non-cash impairment change for Walmart International.

Online sales in the US soared 41 per cent as the supermarket – which is the world’s largest retailer – targeted strong growth in its ecommerce business and Walmart raised its annual earnings outlook.

McMillon said: “We’re pleased with our performance for the quarter. Our associates are responding to change in an inspiring way, and we’re proud of them.

“The Walmart US business saw strong comp sales and expense leverage, and operating income grew for the sixth consecutive quarter.”

“Looking ahead, we’re prepared for a good holiday season,” he added. “Our integrated offering with stores and eCommerce delivers value and convenience for our customers.

“Our associates are working hard to ensure we succeed — one customer, one interaction at a time.”

Main image credit: Getty