Asda sees sales increase but warns on impact of Brexit

Roger Burnley
Roger Burnley
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Supermarket giant Asda saw its sales edge higher but cautioned on the effect Brexit uncertainty was having on its customers.

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The Leeds-based supermarket chain said it had enjoyed a growth in underlying sales due to the later timing of Easter this year.

Like-for-like sales rose 0.5% in its fiscal second quarter, as compared with a decline of 1.1% in the previous quarter.

The group, whose attempt to be taken over by rival Sainsbury’s for £7.3 billion was blocked by the CMA in April, has enjoyed a strong period of trading since chief executive Roger Burnley re-joined the firm as chief executive.

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 that our food business has continued to perform well and our online growth continues to outpace the market."

Mr Burnley sounded a cautious tone on the grocer's immediate outlook.

“Whilst 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.

"We continue to work through our contract changes with colleagues and whilst we recognize 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.”

Walmart CEO Doug McMillon commented on the UK market; “Turning to the U.K. our results for the quarter 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 Q2, according to Kantar.”

Walmart CFO Brett Biggs added: "Against a challenging backdrop in the U.K., Asda net sales increased 1.3 percent and comp sales increased 0.5 percent.

"Our focus remains on driving innovation and strategic priorities for customers, including growing online grocery and improving price gaps.”