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Asda says Brexit uncertainty affecting customers

Asda says Brexit uncertainty affecting customers
FILE PHOTO: Branding is seen on a shopping trolley at an Asda store in west London, Britain, April 28, 2018. REUTERS/Toby Melville/File Photo -
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Toby Melville(Reuters)
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LONDON (Reuters) – Asda, the British supermarket arm of U.S. retail giant Walmart <WMT.N>, 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 Oct. 31, 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 <SBRY.L> for 7.3 billion pounds 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 June 30.

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.

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 <TSCO.L>, Sainsbury’s <SBRY.L>, Asda and Morrisons <MRW.L> – saw total sales fall in the 12 weeks to July 14. The dip reflected a heatwave and the men’s soccer World Cup a year earlier which boosted demand.

(Reporting by James Davey; Editing by Kate Holton and Susan Fenton)

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