Asda reported a slight rise in sales for its fiscal second quarter, helped in part by the shift in Easter, although it highlighted that the uncertainty around Brexit was affecting consumer spending and confidence.
For the three months to 30 June, net sales rose 1.3% year-on-year, while like-for-like sales (excl. fuel) edged up 0.5%. The supermarket chain said the boost from the late Easter was offset by strong comparatives with last year, when sales were boosted by the FIFA World Cup and the prolonged period of hot weather.
Asda revealed that gross margins had declined due to the mix impact of stronger fuel sales, soft sales in higher-margin general merchandise categories, and “strategic price investments and markdowns”. These pressures were partially offset were partially offset by cost-cutting measures.
The group stressed that its overall food business had “performed well”, whilst online sales outpaced the wider market. However, its non-food business was described as being “challenged” during the period due to weakening consumer confidence.
The chain highlighted progress in improving its customer offer, including the expansion of its mobile Scan and Go system to 25 stores, a £22m investment in refurbishing nine stores, and an expanded vegan range (with 35 new products).
Asda stated that the backdrop remained tough, with Chief Executive Roger Burnley noting: “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.”
Burnley added: “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.”
Doug McMillon, CEO of parent Walmart, added: “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.”
